In the previous articles we discussed what levies, due to having tax residence in Italy, a person is obliged to pay when making a real estate investment abroad.

First of all, distinctions must be made between the different aspects of residence, which are often the cause of confusion and misinterpretation.

Questions :

Aiding this by answering the following questions can help us to clarify. What is the difference between civil residence and tax residence? Who is considered to be resident for tax purposes in Italy? When someone is no longer considered to be resident for tax purposes in Italy?

Answers:

The definition of civil residence is found in Article 43 paragraph 2 of the Civil Code. In fact, it defines residence as the place where the person has his habitual abode.

In order to give a broader explanation, we must analyse the first paragraph of the same article.

In the first paragraph of Article 43, we find the definition of domicile. Domicile means the place where the person has established the seat of his business and interests. Thus, domicile represents the seat of the person’s economic activities, whereas residence corresponds to the person’s home. Indeed, residence does not always correspond with domicile.

According to the principle of World Wide Taxation, persons registered in the register of resident population must be and are in any case considered to be tax residents in Italy and therefore taxable persons for income produced in Italy and abroad.

To answer the question, when a person no longer has tax residence in Italy, the law provides for a procedure: i.e. registration in the register of Italians resident abroad (A.I.R.E.).

When one moves to a foreign country with one’s residence and domicile attached, in order not to be considered resident in Italy, one must register with the A.I.R.E. using an on-line procedure.

Failure to register, and therefore not being removed from the register of residents, entails the obligation to declare one’s income in Italy. This procedure, however, runs the risk of infringing the principle of contributory capacity laid down in Article 53 of the Italian Constitution, but we will discuss this aspect later.

Annotation:

On this point, however, a clarification is in order; if a person emigrates abroad and registers with the A.I.R.E. in a country or territory with a favourable tax regime, in accordance with the Ministerial Decree of 4 May 1999 and its subsequent amendments and additions, he is ALWAYS considered resident in Italy.

Next we will specifically analyse the convention converted into law n. 329 of 31-12-1990 stipulated between Italy and the United Kingdom to avoid double taxation.

The list of countries considered to have a favourable tax regime can be consulted at: https://www.agenziaentrate.gov.it/.

The AIRE registration procedure can be consulted at : https://www.esteri.it/mae/it/servizi/italiani-all-estero/aire_0.html