In Italy, an individual is generally considered tax resident if, for most of the tax year — more than 183 days, or 184 days in a leap year — they meet at least one of the tax residence criteria.
These criteria include physical presence in Italy, habitual residence, domicile based mainly on personal and family relationships, or registration with the Italian resident population register, unless the registration can be disproved.
Italian tax residents are generally taxed on their worldwide income, while non-residents are taxed only on Italian-source income.
Double tax residence: how to avoid double taxation
In general, there is nothing preventing a natural person from having more than one tax residency, but each must be in a different legal system.
Double legal taxation identifies the situation in which two States impose similar taxes, on the same tax base of the same tax period, to the same legal entity. This is how the OECD Model, the main instrument-guide to the drafting of bilateral conventions, identifies double taxation.
The OECD has approved the update to the Model Tax Convention on income and capital, providing for the so-called “tie breaker rule” (art. 4 §2) in order to solve and avert potential conflicts of double residence tax, and to overcome the fiscal asymmetries existing in the field on an international level.
For individuals, Article 4(2) of the OECD Model Convention provides a sequence of treaty tie-breakers: permanent home, centre of vital interests, habitual abode and nationality. Where these tests do not resolve the case, however, residence is settled by mutual agreement between the competent authorities. The wording of the applicable bilateral treaty must always be checked.
Double taxation in the European Union
In the European Union system, international double taxation has been considered by the European Commission as a significant obstacle to the free market, to be eliminated and avoided. However, no ban on double taxation has been legally expressed in EU law to date, as also recalled by the Court of Justice (case C-336/96 Gilly).
Although direct taxation generally remains within Member States’ competence, EU primary law and the fundamental freedoms constrain the exercise of that competence. Moreover, Article 115 TFEU empowers the Council to adopt directives approximating Member States’ laws, regulations and administrative provisions that directly affect the establishment or functioning of the internal market.
Double taxation in Italy
The Italian legal and tax system considers its adaptation to the OECD Model Convention relevant, also by virtue of the reference to art. 3 of Law n. 111/2023 and in the preamble of Legislative Decree n. 209/2023.
It is fundamental to underline that the content of the OECD Model is not legally binding, as it is a model to which bilateral Conventions signed between Contracting States have to be inspired. The Conventions will acquire legal value once they become part of the State legal system.
In other words, bilateral Conventions that have entered into force act as a regulatory reference, together with the main Italian tax laws in force – i.e.:
- the Statute of the rights of taxpayers (Law No. 212 of 27 July 2000);
- the Consolidated Law on Income Taxes – TUIR (Presidential Decree n. 917/1986);
- the provisions on the establishment of income taxes (Presidential Decree n. 600/1973);
- the regulation on tax litigation (Legislative Decree n. 546/1992);
- the VAT regulations (Presidential Decree n. 633/1972);
- Legislative Decrees n. 471/1997 and 472/1997 on administrative penalties;
- Presidential Decree n. 602/1973 on tax collection.
Legislative Decree No. 117 of 19 June 2026 entered into force on 4 July 2026, but its substantive provisions apply from 1 January 2027 (Article 377). Until 31 December 2026, the provisions of Presidential Decree No. 917/1986 remain applicable. From 1 January 2027, Articles 1–191 of that Decree are repealed pursuant to Article 376(1)(e), and references to income-tax provisions must be checked against the new Code.
Bilateral Conventions against double taxation in Italy
The Italian legal system does not provide any obstacle clause regarding situations of double tax residence or double taxation, but tries to solve them. Indeed, Italy has signed numerous bilateral Conventions against double taxation. These legal instruments make it possible to avoid double taxation by harmonizing the tax treatment of multiple tax residences.
However, it should be specified that this is only possible when bilateral Conventions have been signed and ratified between Italy and the Contracting State. Therefore, the existence of these Conventions makes it possible to identify the actual tax residence and to apply the right tax regime.
It is essential to remember that, pursuant to art. 169 TUIR, the provisions of Presidential Decree n. 917/1986 (TUIR) apply also in derogation to the international conventions in force against double taxation, if they are more favorable for the taxpayer. In this way, a favorability principle is recognized to taxpayers, in case they are more advantaged by the provisions of the TUIR than those of the Convention.
The implicit assumption is the previous existence of a bilateral agreement between Italy and the other State, in which the treatment provided for the taxpayer is more disadvantageous than what provided for by national legislation under the same conditions. This applies even if national law were to conflict with the Convention. If the previous requirements are met, Art. 169 TUIR will be applied.
To take advantage of the benefits provided by double taxation agreements, taxpayers may request a tax residency certificate.
Mutual Agreement Procedure, arbitration and EU dispute resolution
Under Article 25(1) of the OECD Model Tax Convention, the three-year period generally concerns the deadline for the taxpayer to present a Mutual Agreement Procedure (MAP) case, measured from the first notification of the action resulting in taxation not in accordance with the applicable treaty. However, this is not a deadline by which the competent authorities must reach an agreement: they are obliged to seek one in a fair and objective manner, but are not obliged to effectively solve the case. Filing periods, exceptions and time limits must be checked under the bilateral treaty and any applicable amendments or alternative EU procedure.
Where a MAP fails to resolve a dispute, unresolved issues may be submitted to arbitration at the taxpayer’s request, provided that the applicable bilateral tax treaty, including any amendments under the Multilateral Instrument (MLI), contains an effective arbitration provision and the relevant procedural requirements are met. Article 25(5) of the OECD Model Tax Convention, introduced in 2008, provides for this mechanism, but arbitration is not automatically available under every bilateral treaty.
For qualifying disputes between EU Member States involving the interpretation or application of double-taxation agreements, Council Directive (EU) 2017/1852, implemented in Italy by Legislative Decree No. 49/2020, establishes a distinct dispute-resolution framework. Under this procedure, the competent authorities generally have two years, subject to a possible one-year extension, to resolve an accepted complaint; further dispute-resolution stages may apply if no agreement is reached. This deadline must not be confused with the three-year period for submitting a complaint.
Some bilateral conventions (e.g. those between Italy and Germany, Switzerland and Panama) also contain a split year clause, under which the tax period relevant for the residence attribution can be split between the Contracting States in the event of a change of residence during the year (cf. paragraph 10 of the Commentary on Article 4 of the OECD Model). This treatment applies only for treaty purposes and on the terms of the specific treaty: it is not automatic and does not replace the Italian domestic rule based on the entire tax period.
Registered Residence and Tax Residency in Italy
In the Italian context, it is important to distinguish the concepts of tax residence and registered residence, both in the case of Italian and foreign citizens, since different obligations and rights arise from them.
Registered Residence is governed by the relevant paragraph of art. 43 of the Italian Civil Code, according to which it coincides with the place where the person has his habitual residence, that is, where the presence of the subject is real and habitual. Moreover, registered residence consists in an administrative rooting that legally testifies the political and social link between a subject and a territorial community. In other words, it is a status that provides a precise identity to the person.
On the other hand, tax residency is one of the criteria used by the Italian tax system to consider a person as a resident or not. It represents a legal condition that implies the fulfilment of certain tax obligations. The main reference is represented by art. 2 of Presidential Decree n. 917/1986 (TUIR), largely reformed by Article 1(1) of Legislative Decree No. 209/2023 (on “Implementation of tax reform in the field of international taxation”), applicable from 1 January 2024 pursuant to Article 7(1) of that Decree.
Do foreigners have to be registered in Italy?
According to Italian legislation, residence registration with the local Ufficio Anagrafe is an unconditional subjective right for Italian citizens and for non-EU citizens residing in Italy (art. 6 c.7 D. Lgs. 286/1998). However, there are specific requirements, and, as a result, registration is not automatic.
In particular:
- foreign citizens’ stays on national territory have to be legal. Requirements in this sense vary according to the status of European or extra-EU citizen. EU workers and self-employed persons are entitled to reside in Italy for more than three months and to establish their residence in Italy without a separate requirement to show sufficient resources and comprehensive health insurance; different resource and health-cover conditions apply to economically inactive persons and students;
- non-EU citizens may access residence registration by presenting their passport and residence permit – the receipts of the first issue and of renewal are valid for registration.
- for asylum applicants, residence registration may be based on the asylum-seeker residence permit or the qualifying application receipt, subject to the applicable registration requirements (Article 5-bis of Legislative Decree No. 142/2015). Beneficiaries of international protection may use their relevant residence permit.
Who is subject to taxation in Italy?
Art. 2 par. 1 of TUIR provides that Italian resident and non-resident natural persons are taxable. However, mere presence in Italy does not, by itself, establish an income-tax liability: residents are taxable on worldwide income and non-residents on Italian-source income, subject to the applicable rules and treaties.
Actual physical presence is one of the alternative domestic residence tests only when it extends over most of the tax year; shorter stays may still give rise to specific obligations where the relevant taxable event occurs.
What makes you a tax resident in Italy?
For income tax purposes, art. 2 par. 2 of TUIR specifically provides that natural persons who have their residence (according to the Italian Civil Code, art. 43) or domicile in Italy for most of the tax period (Art. 7 TUIR) – also considering fractions of day – are tax resident in Italy.
These conditions are alternatives: it means that it is sufficient that at least one of the three is fulfilled for a natural person to be granted tax residence in Italy.
In summary, the three alternative conditions are:
- Residency;
- Domicile;
- Mere presence on the national territory.
Current Italian Tax Residency Rules
Because of the recent legislative news, there are some innovations that deserve to be highlighted to fully grasp the requirements for the attribution of tax residence and the subsequent obligations. In particular, there are three aspects to be considered:
- The tax period;
- The new definition of domicile for the purpose of tax residency in Italy;
- The primary connotation of family and personal aspects.
The 183 days’ rule for tax residency in Italy
The 183-day rule does not require continuous presence in Italy. Days spent in Italy during different periods of the year are added together. Even fractions of days may count, meaning that arrival and departure days can be relevant when calculating physical presence.
For this reason, individuals who travel frequently should keep evidence of their movements, such as flight tickets, boarding passes, passport stamps, accommodation records and work calendars.
New definition of domicile for tax residency in Italy
Secondly, in the second section of art. 2 par. 2 of TUIR, a new definition of domicile is provided. This concerns exclusively the interpretation of the concept of domicile for the purpose of the application and implications of the new art. 2 of TUIR.
Therefore, the legislative news defines domicile as the place in which the subject’s personal and family relationships “mainly” develop. The Italian Revenue Agency clarified these revised residence criteria in Circular No. 20/E of 4 November 2024; whether a person has their main personal and family ties in Italy still requires a case-by-case factual assessment.
For tax-residence purposes, this new definition of domicile replaces the previous reference to the civil-law concept under Article 43 of the Italian Civil Code, while the separate criterion of civil-law residence remains unchanged.
Thus, only in the context of the TUIR and, in particular, of the attribution of the status of tax residence, the definition of domicile provided by art. 2 par. 2 TUIR is to be considered as prevalent, with respect to the Civil Code one (art. 43).
The role of personal and family relationships
Thirdly, the above-mentioned “mainly” clarification, expressed in art. 2 par. 2 of TUIR, emphasizes the primary importance of the personal and family relationships developed by the subject in a given place.
Other criteria for tax residency in Italy: burden of proof
According to par. 2, natural persons who have been registered with the registers of resident population for most of the tax period are also presumed to be tax residents, unless they prove otherwise. Thus, there is a legal presumption which can only be disproved if evidence to the contrary is provided.
Since 1 January 2024, this presumption has been rebuttable rather than absolute, whereas habitual residence, tax domicile and physical presence constitute separate, alternative criteria for establishing Italian tax residence.
In this situation, the logical-argumentative principle of the burden of proof emerges. According to this, whoever intends to prove or disprove the existence of an assumption, a fact or a presumption has the obligation to provide the evidence supporting their thesis. For tax law, we refer to art. 2697 of the Civil Code, which provides that:
Whoever wishes to assert a right in court must prove the facts on which the right is based. Who claims the ineffectiveness of such facts or that the right has been changed or extinguished must prove the facts on which the exception is based.
The Latin maxim onus probandi incumbit ei qui dicit expresses and sums up well the burden of proof: the latter falls on those who invoke a right or a fact in support of their thesis. Law n. 130/2022 introduces paragraph 5-bis to art. 7 of D. Lgs. 546/1992 (tax litigation), giving greater rigor to the determination of the person on whom the burden of proof rests.
On the one hand, the Financial Administration, which in the process plays the part of plaintiff and creditor, must prove the an and the quantum of its tax claim, as well as the infringements contested. On the other hand, the burden falls on the taxpayer to justify their claims for refund
Tax Residency for Italian citizens
Finally, exclusively for Italian citizens, art. 2 par. 2-bis provides that those who have been removed from the Italian resident population register and have transferred their residence to States or territories with a privileged tax regime, as identified by the Ministerial Decree of 4 May 1999, as subsequently amended, are presumed to remain Italian tax residents unless they prove otherwise.
In the light of this other legal presumption, the same arguments as above apply to the burden of proof.
The tax base: a world-wide taxation
In general, the tax base is the value on which the tax rate is applied to calculate the tax to be paid. The tax base is the part of the income on which the tax is applied after deductions and reductions.
How to calculate total income
In Italy, art. 3 par. 1 TUIR provides that the tax is applied to the total income of the subject: this implies a world-wide taxation of the individual. The total income is determined differently depending on the subject’s status:
- for residents, the total income consists of all the income held, net of deductible charges (indicated in art. 10 TUIR) (art. 3 c.1 TUIR);
- for non-residents, instead, the total income is formed only by the income produced in the territory of the Italian State (Art. 3 c.1).
Art. 3 par. 2 TUIR provides for a derogation from paragraph 1, under which the income tax listed in Article 17 TUIR (subject to the provisions of paragraphs 2 and 3) applies separately.
Excluded income
Art. 3 par. 3 TUIR lists the income excluded from the calculation for the purpose of determining the tax base. Specifically, the following types of income are excluded:
- tax-exempt income and income subject to withholding tax or substitute tax;
- periodic child support allowances payable to the spouse as a result of effective and legal separation or annulment, dissolution or termination of the civil effects of the marriage, resulting from judicial measures;
- family allowances and emoluments for household loads, however defined and provided in accordance with the law;
- the social majority of pension benefits (Art. 1 L. 544/1988)
- the sums paid by the Italian Government as scholarships to foreign nationals under international agreements.
Taxation in Italy of income produced abroad
For a complete overview of Italian taxation for natural persons, read our complete guide on taxes in Italy for expats.
The income produced by a person abroad is not ignored by Italian law and it is considered only if it contributes to the formation of total income. Under certain conditions, the Italian tax system may recognize a tax credit. On a preliminary basis, it is appropriate to anticipate that, as a general rule, the foreign tax credit is not available where the corresponding foreign-source income is excluded from Italian aggregate taxable income because it is subject to:
- final withholding tax (ritenuta alla fonte a titolo d’imposta);
- substitute taxation (imposta sostitutiva);
- other comparable final taxation that excludes the related income from aggregate taxable income.
According to art. 165 par. 2 TUIR, income produced abroad is considered according to criteria that are reciprocal to those provided for identifying income produced in the Italian territory (art. 23 TUIR ad. e.g.: property income, capital income, royalties). Here, the principle of reciprocity is enshrined.
Foreign tax credit
If a person obliged to comply with tax obligations in Italy also has income abroad that contributes to the formation of overall income, art. 165 par. 1 TUIR provides that taxes definitively paid abroad on foreign income may be deducted from the net tax due.
However, there is a limit: the deduction will be allowed until reaching the tax share corresponding to the ratio between income produced abroad and total income, net of losses from previous tax periods allowed to be deducted. To summarize visually, the formula is:
(foreign income × net tax due) ÷ net total income.
If income is produced in several foreign countries, paragraph 3 of art. 165 TUIR provides that the deduction is applied separately for each State. This allows individuals who own sources of income in various nations not to lose the benefit of deduction.
Requirements to obtain the tax credit
To summarize, in order for the right to tax credit to be recognized, the following situations must occur:
- the foreign income must contribute to the overall taxable income in Italy;
- income must be produced abroad;
- the taxes must have been paid definitively abroad, in the State(s) where the income was produced. If taxes have been paid provisionally or as advance payments, the tax credit will be attributed in the year in which the payment becomes definitive;
- the nature of the foreign income tax must be comparable to the Italian one (principle of reciprocity).
However, the deduction is not always recognized. Indeed, art. 165 par. 8 TUIR establishes that the deduction is not recognized in case of:
- Failure to submit the tax return, or
- Failure to indicate the income produced abroad in the tax return submitted.
These two conditions are alternatives: therefore, it is sufficient for one of them to take place for the deduction to be rejected.
Calculation of the deduction
The deduction is calculated in the tax return for the tax period to which the income produced abroad belongs (Art. 165 par. 4 TUIR). There is one condition: the final payment of the tax abroad must take place before the submission of the tax return in Italy.
However, if the final payment is made later, art. 165 par. 7 TUIR applies. In this case, a new settlement is carried out, also taking into account the possible increased foreign income. The deduction concerns the tax due for the tax period to which the declaration refers.
If the period for assessment has already passed, the deduction is limited to the share of foreign tax proportional to the amount of income produced abroad.
Carry-back and Carry-forward
In addition, for all types of foreign income, art. 165 par. 5 provides an additional possibility of calculation for the deduction. This can be calculated from the tax for the relevant period, even if the final payment will take place within the term for submitting the declaration for the first subsequent tax period.
This option can be exercised upon indication (in the tax return) of the foreign taxes deducted, which have not been paid definitively yet.
Moreover, for all types of foreign income, art. 165 par. 6 introduces the possibility to carry-forward and carry-back surpluses that remain unused for a period, in both cases, of a maximum of eight years. Two surpluses can be identified:
- one is represented by the share of Italian tax on foreign income, which exceeds the foreign tax (Italian tax > foreign tax);
- the other one derives from foreign tax exceeding the share of Italian tax on foreign income (foreign tax > Italian tax).
Tax residency in Italy: additional obligations
As pointed out extensively in the previous paragraphs, tax residency in Italy (actual or presumed) involves the onset of several obligations under the tax law in force in the country. It should be added that, among the others mentioned above, there are also other obligations such as:
- the fiscal monitoring obligation;
- the payment of property tax on the value of properties abroad (IVIE);
- the payment of tax on the value of financial products (IVAFE).
Fiscal monitoring obligation
Cross-border transfer reporting by financial intermediaries is governed by Article 1 of Decree-Law No. 167/1990, while the annual fiscal monitoring obligations of Italian residents holding foreign investments, foreign financial assets or crypto-assets are governed by Article 4 of the same Decree-Law. Financial intermediaries must report the analytical data of transfers and transactions to or from abroad of an amount equal to or greater than €5,000, also carried out in virtual currency or crypto-activity.
Italian tax residents are generally required to disclose their foreign investments, foreign financial assets and crypto assets in their annual income tax return (Quadro RW, for individuals). However, foreign bank deposits and current accounts are exempt from fiscal monitoring where their combined maximum value during the tax year does not exceed €15,000, although reporting remains mandatory where IVAFE is due.
IVIE: Property Tax on the value of properties abroad
Natural persons resident in Italy who own property abroad must pay tax on the value of property located abroad (IVIE), regulated by Law n. 214/2011. The tax is due for:
- the owners of building areas, buildings and land, including business properties;
- the holders of real rights of usufruct, use or dwelling, emphyteusis and surface on them;
- the concessionaires, in the case of concession of state-owned areas;
- lessees for property, even to be built or under construction, granted on finance lease.
The tax does not apply to owners of buildings used as main dwellings and their appurtenances, and to the marital house legally assigned to the spouse. These properties must not be classified in Italy in cadastral categories A/1 (stately dwelling), A/8 (villa) and A/9 (castles and palaces of eminent artistic or historical relevance).
According to the amendments introduced by the 2024 Budget Law (art. 1 par. 91 lett. a) Law n. 213/2023), the ordinary rate of IVIE is 1.06%.
IVAFE: Tax on the value of financial products
Also pursuant to L. 214/2011, natural persons resident in Italy must pay tax on the value of financial assets held abroad (IVAFE) if they hold the following types of products abroad:
- financial products;
- current accounts;
- savings accounts.
Art. 1 par. 91 lett. b) of L. 213/2023 provides that the tax is fixed at a yearly rate of 4×1000 for financial products held in States or territories with a privileged tax regime or identified by the decree of the Minister for Economic Affairs and Finance of 4 May 1999. By contrast, the ordinary IVAFE rate for financial products is 2×1000. For foreign current accounts and savings passbooks held by individuals, IVAFE is instead fixed at €34.20 per account/passbook per year, adjusted for ownership share and holding period.