New rules for tax residence in Italy for individuals, companies, and entities

News Flash No. 35/2024

The Italian Revenue Agency News the effects of the changes introduced by the International Taxation Decree (Legislative Decree No. 209/2023) regarding the tax residence of individuals, companies, and entities, which will come into force in 2024. Natural persons who are resident in Italy are those who have their domicile in the territory of the State for most of the year, developing their personal and family relationships mainly in our country. The concept of "domicile" has therefore changed: unlike the previous regulations, it is no longer borrowed from the Civil Code but, in line with international practice, personal and family relationships are given precedence over economic ones. In any case, this is without prejudice to the possible application of provisions contained in double taxation agreements. The practice document illustrates the new rules with concrete examples.

A new "residence" for individuals

Following regulatory changes, simply being present in the country for most of the tax period—183 days in a year or 184 days in the case of a leap year, including fractions of days—is sufficient to establish tax residence in Italy. The circular provides clarification on the calculation of fractions of days. It also explains that, as a result of the introduction of the new physical presence criterion, people who work remotely in Italy for most of the tax period are considered tax residents in Italy, without the need to meet any of the other criteria provided for by the legislation (civil residence, domicile, registration in the registry). Finally, as a result of the changes introduced, registration in the resident population register acquires the value of a relative (and no longer absolute) presumption of tax residence in Italy: it therefore applies unless the taxpayer can provide evidence to the contrary. Finally, the criterion of residence under the Civil Code remains unchanged, as does the principle of the alternativeness of the various criteria.

Companies and entities, new criteria for residency

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