The criteria for determining the tax residence of natural persons in Italy

They are dictated by Article 2 of the D.P.R. 917/1986 (“TUIR”), which states that for the purposes of income tax, are considered to be residents of the State natural persons who for most of the tax period are registered in the population registers of the resident population, or have their residence or domicile in the territory of the State under the Civil Code. The conditions mentioned above are alternatives; this means that the existence of only one of them is sufficient to suggest that a person is qualified as residing in Italy for tax purposes.

Residence for civilian purposes

As expressly provided by the tax law, reference should be made to the concepts of the Civil Code which, in Article 43, provides that “the domicile of a person is situated at the place where he has established the seat of his business and the residence is where the person lives habitually”.

Difference between residence and domicile

Whereas the residence is linked to the permanence of the subject in a sufficiently stable place and with the intention of settling there (objective data), the domicile consists of the concentration of the affairs and interests of the person at a particular place without the need for his actual presence in that place (objective data) and the desire to establish and maintain in a particular place the main “center” of the generality of relations (subjective data). The notion of interests to which reference should be made, once limited to the economic and financial sector of the subject, must be understood as referring, by unanimous jurisprudential interpretation, to the moral, social and family sphere of the subject. With regard to the temporal aspect, the criterion retained by the legislator is that of the temporal prevalence during the tax period. With regard to the precise definition of the tax period, reference is made to Article 7 of the TUIR according to which the reference period is therefore the calendar year. Residents who have been in one of the above conditions for at least 183 days (184 days in leap years) are considered residents.

Tax havens

In this regard, the legislator has recently introduced paragraph 2-bis of Article 2 of the TUIR which states that ” are considered as residents, unless proven otherwise, Italian citizens removed from the population register of the resident population and transferred to states or territories other than those identified by decree of the Minister of the Economy and Finance … “In practice, Italians who have transferred their homes and / or their residences to tax havens are considered as residents in Italy, unless proven otherwise.

Residency in tax havens

To be complete, note that the above-mentioned list of countries, “tax havens”, may be updated in accordance with the guidelines of the OECD and other international and / or community organizations. In this regard, we mention some of the preferential tax countries included in the above-mentioned list in 2011 to name a few: Andorra, Bahamas, Barbados, Bermuda, Philippines, Hong Kong, Lebanon, Liechtenstein, Macao, United Arab Emirates , Monaco, San Marino, Singapore, Switzerland, Vanuatu.