Criteria for determining the tax residence in Italy

In order to establish whether an individual is a resident for tax purposes in Italy, reference should be made to Article 2, paragraph 2, of the TUIR, based on which people are considered residents “who for most of the tax period they are registered in the registers of the resident population or have their domicile or residence in the territory of the State pursuant to the civil code ”.

The three conditions mentioned above are alternatives, as it is sufficient that only one of the requirements be verified in order for a natural person to be considered fiscally resident in Italy and, vice versa, only when the three conditions of residence are simultaneously absent in the tax period of reference (ie in the solar years considered) a natural person can be considered non-resident in our country. This implies that, regardless of the registration in the population register of the resident population, the verification of the existence of at least one of the remaining requirements (residence and domicile) assumes fundamental importance for the purposes of its tax qualification as a subject resident in Italy. In this case, it is necessary to refer to the civil law of residence and domicile.

  • Residence is defined by the civil code as “the place where the person has his habitual residence”. It is determined by the habitual voluntary abode of a person in a given place, so that both the objective fact of permanent permanence in that place and the subjective element of the will to remain there contribute to establishing this juridically relevant relationship. So that the habitability of the dwelling remains if the subject works or carries out other activities outside the municipality of residence (in the territory of the State), as long as he keeps the dwelling in it, he returns to you whenever possible and shows the intention of keeping the center there of their family and social relations.
  • The domicile of a person, on the other hand, coincides with “the principal place of business and interests” regardless of the actual presence in that place. The expression in question must be understood in a broad sense, including not only relations of a patrimonial and economic nature but also moral, social and family relationships.

With regard to the aforementioned requirements, it is recalled that Italian jurisprudence has intended to give particular importance, as a criterion for identifying the fiscal residence of a natural person, to the place in which the economic and emotional interests of the person are primarily located, starting from the sphere of personal relations , intended as family ties.

It should be noted that, in the event of a simultaneous Italian tax residence and another country, by virtue of the application of internal regulations, a residence conflict between the two countries would occur which must be resolved by resorting to the provisions of the relative Conventions to avoid double taxation on income, which establishes how the taxing power must be distributed between the two Contracting States.

In the event, for example, of a simultaneous Italian and Swiss tax residence, the conflict of residence between the two countries must be resolved by resorting to the provisions of the Convention between Italy and Switzerland to avoid double taxation on income, ratified by law of 23 December 1978, n. 943 (hereinafter the Convention or the international Treaty) which establishes how the taxing power must be divided between the two Contracting States. Pursuant to Article 4, paragraph 1 of the Convention, the term “resident of a Contracting State” means any person who, by virtue of the legislation of that State, is subject to tax in the same State, by reason of his domicile, of his residence (…) or any other criterion of a similar nature “. Therefore, according to the conventional legislation, each State identifies its tax residents according to domestic laws.

Pursuant to the subsequent paragraph 2 of the aforementioned article 4, if a natural person is resident of both States, the same is considered, first and foremost, resident in the State in which he has a permanent home and, subordinately (if he has a permanent residence in both States), the residence of a natural person is determined according to the following residual criteria arranged in descending order:

  1. location of the center of vital interests (the natural person who has a principal residence in both States will be considered resident in the Country in which his personal and economic relations are closer);
  2. habitual residence (where it is not possible to identify the residence of the tax payer on the basis of the two criteria mentioned above, a natural person will be considered a resident of the State in which he habitually resides);
  3. nationality of the natural person (when the first three criteria are not direct, the tax payer will be considered a resident of the Contracting State the Convention of which he has the nationality);
  4. when, finally, a natural person has the nationality of both countries or none of them, the Contracting States of the Convention will resolve the question by mutual agreement.

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