New Rules for Tax Residency in Italy for Individuals, Companies, and Entities

Flash News n. 35/2024

The Italian Revenue Agency, with its own News, has illustrated the effects of the amendments introduced by the International Taxation Decree (Legislative Decree no. 209/2023) concerning the tax residency of individuals, companies, and entities, effective from 2024. Individuals who, for the majority of the year, have their domicile within the State territory, primarily developing personal and family relationships in our country, are considered residents in Italy. Thus, the concept of 'domicile' changes: unlike the previous regulation, it is no longer derived from the Civil Code but, in line with international practice, precedence is given to personal and family relationships rather than economic ones. In any case, the potential application of provisions contained in Double Taxation Treaties remains unaffected. The practical document also illustrates the new rules with concrete examples.

A New 'Residency' for Individuals

Following the regulatory amendments, the mere presence on the State territory for the majority of the tax period - 183 days in a year or 184 days in a leap year, including fractions of a day - is sufficient to establish tax residency in Italy. The News provides clarifications on the calculation of day fractions. Furthermore, it illustrates that due to the introduction of the new physical presence criterion, individuals working in smart working in the Italian State for the majority of the tax period are considered tax residents in Italy, without the need for any of the other connecting criteria provided by the legislation (civil residency, domicile, registry registration). Finally, as a result of the introduced amendments, registration in the resident population registry acquires the value of a relative (and no longer absolute) presumption of tax residency in Italy: it is valid, therefore, unless proven otherwise by the taxpayer. Lastly, the criterion of residency under the Civil Code remains unchanged, as does the principle of the alternative nature of the various criteria.

Companies and Entities, New Criteria for Residency

Would you like to know more?

Subscribe to studiopiceci.it to continue reading these exclusive posts.

Subscribe now