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Tax Residency in Italy

By Gareth Horsfall
This article is published on: 22nd September 2014

Tax Residency is always one of those issues that raises it head in batches, from time to time.

So, I thought I should clarify the matter again.

Residency determines where you may or may not be located for tax purposes.

The notion that you can be resident in Italy but pay tax elsewhere is an outdated notion and one that should be forgotten.


Here are the facts as determined by Section 2 of the Italian Income Tax Code:

An individual is considered resident for tax purposes in Italy if, for most of the calendar year (183 days), you are:
* registered with the Registry of the Resident Population (Anagrafe).
* resident or domiciled in the territory of the Italian state, as defined by Section 43 of the Italian Civil code.

And, according to Section 43 of the Italian Civil code:
* Your place of residence is the place where you, the individual, have your habitual abode.
* your place of domicile is your principal place of business and social/family interests.

Employment income is considered ‘produced’ in Italy if the work activity (i.e. business) is performed on Italian territory (this also means internet activity that is carried out in Italy, even if the focus of the internet activity is in another country).

Italy has been quite vocal about trying to clamp down on people who are claiming residency in Italy (and using public services) but not submitting tax returns, and also those who are operating business activities in Italy but claiming residency for themselves, or the business, elsewhere.

In reality it would be hard for the authorities to track them down, but with the open exchange of information agreements between Italy, UK, Germany, France, Spain and now the USA, it is hard to imagine how computers will not, before long, be merely churning out lists of wrongdoers every week.

The better way is to plan your way around your residency and your respective tax authorities.

Make sure you get your residency options right first time. By this, I mean talk to the people who understand these issues, plan carefully in advance of taking residency in Italy or elsewhere and, ensure that you take advantage of the tax breaks available to you. Failing to do so can create burdensome Italian administrative headaches after the event.

In any case, we should remember the words of Benjamin Franklin who once said

“An ounce of prevention is worth a pound of cure”.

If you have any questions regarding your own residency or if you would like to try and plan your way around your residency in a more tax efficient manner then you can contact me.

Article by Gareth Horsfall

If you live in Italy and or have financial interests in Italy you can contact Gareth Horsfall directly on: to request more information about how he may be able to help you. Alternatively you can complete the form below and a message will be sent to him. If you would like to read more about Gareth's work you can follow his blog on tax and financial planning in Italy HERE

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