Circular no. 20/E of 4 November 2024 of the Agenzia delle Entrate illustrates the effects of the changes introduced by the International Taxation Decree (Legislative Decree no. 209/2023) concerning the tax residence of individuals and companies, which will be in force from 2024.

Here is the English-language courtesy version

Natural persons

Residents of Italy are natural persons who have their domicile on the territory of the State for most of the year: in other words, they develop their personal and family relationships mainly in our country.

From 2024 onwards, it will be sufficient to be present in Italy for 183 days a year, or 184 days in the case of a leap year, including fractions of a day, to be considered resident for tax purposes.

With this new criterion, for example, persons who work smart in Italy for most of the tax period are considered tax residents in Italy, even if they are not registered with the Civil Registry, as the substantive criterion prevails over the formal/bureaucratic one. On the contrary, a person who is registered – and therefore in principle liable to pay tax in Italy – can prove that his personal and family relationships are mainly developed abroad.

New criteria for the tax residence of companies

Under the new rules, companies are considered residents if they have their registered office, effective centre of management or principal place of business in Italy for the majority of the tax period. These are three alternative criteria, i.e. it is sufficient to meet only one of them in order to be considered resident in Italy, provided that the criterion is met for the greater part of the tax period. The place of management corresponds to the place of effective management and the principal place of business.