Italy

Article 1 of Legislative Decree no. 209 of 27 December 2023 introduced significant changes to the connection criteria for determining the tax residency of individuals under Article 2, paragraph 2, of Presidential Decree no. 917 of 22 December 1986.

According to Article 2 of the Italian Tax Code, an individual is considered Italian resident for tax purposes if, for the greater part of the fiscal year, i.e. for more than 183 days, considering even fractions of days, one of the following conditions is met:

• the individual is physically present on Italian territory;
• the individual has a residence in Italy, meaning habitual abode;
• the individual has a domicile in Italy, meaning the principal centre of personal and family relationships.

If one of the above conditions is met, the individual qualifies as Italian tax resident.

Furthermore, unless proved otherwise, individuals who are registered in the record of the resident population for most of the tax period are presumed to be Italian tax residents.

The criteria for determining tax residency give primary relevance to the place where personal and family relationships of the individual mainly develop.

Therefore, the legislation establishes a hierarchy between the connection criteria, giving priority to personal and family relationships over economic and work-related interests.

An Italian citizen who transfers to a foreign country must cancel their registration with the Records of the Italian Resident Population and register with the Records of Italians Resident Abroad, the Anagrafe Italiani Residenti Estero or AIRE.

An anti-abuse rule provides that Italian citizens who transfer residence to countries considered as tax havens are deemed to be resident in Italy even if they are no longer registered in the Records of the Italian Resident Population, unless otherwise proven by the individuals.

Italian tax residents are subject to taxation for the whole fiscal year, i.e. from January through December.

Any provision covered by double tax treaties between Italy and other countries shall apply.

The Italian tax authority is increasingly focused on the assessment of the tax residence status of Italian citizens who moved their tax residence abroad.

This focus is supported by:

• broader access to information through European and international data exchange mechanisms, including the Common Reporting Standard, CRS;
• implementation of more precise databases which collects relevant information to identify the risk that an individual may be re-qualified as Italian tax resident because their centre of vital interests is effectively located in Italy.