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

News Flash No. 35/2024

The Revenue Agency, through its News, has illustrated 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, effective from 2024. Individuals are considered residents in Italy if they maintain their domicile within the State's territory for the majority of the year, primarily developing personal and family relationships in our country. Consequently, the concept of 'domicile' is redefined: unlike the previous regulations, 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 practice document also illustrates the new rules with concrete examples.

A new 'residence' for individuals

Following the regulatory changes, mere presence on the State's territory for the majority of the tax period - 183 days in a year or 184 days in a leap year, including fractions of days - is sufficient to establish tax residence in Italy. The News provides clarifications on the calculation of fractions of days. It also illustrates that, due to the introduction of the new criterion of physical presence, 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 connection criteria provided for by the legislation (civil law residence, domicile, registration with the registry office) to be configured. Finally, as a result of the changes introduced, registration in the registry of the resident population acquires the value of a relative (and no longer absolute) presumption of tax residence in Italy: it is therefore valid unless proven otherwise by the taxpayer. Finally, the criterion of residence under the Civil Code remains firm, as does the principle of the alternative nature of the different criteria.

Companies and entities, new criteria for residence

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