Leaving Italy: the residence of individuals after 2024

From the old criteria to the reform of 2023

Italian income tax is levied on residents on their worldwide income and on nonresidents only on income produced in Italy. Everything therefore depends on the definition of residence in Article 2 of the Consolidated Income Tax Act (Testo unico delle imposte sui redditi, TUIR). Until 2023 the provision named three alternative criteria. A person was resident if for the greater part of the tax period he or she was registered in the population register (anagrafe della popolazione residente), or had in Italy the domicile or the residence within the meaning of the Civil Code. Under Article 43 of the Civil Code, the domicile is the place where a person has established the principal seat of his or her business and interests, and the residence is the place of habitual abode.¹ Registration in the population register worked as a conclusive criterion in one direction: a person who remained registered was resident, whatever the facts. Deregistration, on the other hand, proved nothing, because the authorities could still show that domicile or residence remained in Italy.

Legislative Decree No. 209 of 27 December 2023, issued under the enabling law for the tax reform of 2023, rewrote Article 2 paragraph 2 TUIR with effect from 1 January 2024. The provision now reads that persons are considered resident who "for the greater part of the tax period, considering also fractions of a day, have their residence within the meaning of the Civil Code or their domicile in the territory of the State or are present there". For the purposes of the provision, domicile means "the place where the personal and family relations of the person principally develop". Persons registered in the population register for the greater part of the tax period are presumed to be resident "unless proven otherwise".² The Revenue Agency explained the new rules in Circular No. 20/E of 4 November 2024, a document of about thirty pages with examples.³

Domicile as the centre of personal and family relations

The most important change for entrepreneurs is the new tax definition of domicile. The Civil Code definition, which still governs civil law questions, refers to business and interests. Under it the Italian courts often treated a person who had moved abroad but continued to run an Italian company as domiciled in Italy, because the principal seat of his economic interests remained there. The new tax definition refers to personal and family relations. According to the summary of the circular, the new rule gives priority to personal and family relations over economic ones, so that the place where a person runs his business no longer determines his domicile on its own.⁴ For an entrepreneur who moves to Lugano with his spouse and minor children, the reform improves his position. He may continue to sit on the board of his Italian company or own it without thereby keeping an Italian domicile.

The reform does not help the entrepreneur who moves alone. If the spouse and children remain in Milan, the place where personal and family relations principally develop is likely to be Milan, whatever the entrepreneur's address and however many nights he spends in Lugano. The same is true of separated spouses who share the care of children in Italy, of entrepreneurs whose new partner lives in Italy and of elderly entrepreneurs whose social life remains attached to an Italian town. Because the word "principally" requires a weighing of relations, the authorities will look at where the person spends weekends and holidays, where the children go to school, where the family doctor is and where friends and associations are. The criterion is personal, which makes it harder to arrange and easier to prove than the old economic criterion.

Notes

1. Codice civile, Art. 43 paras 1 and 2, text at Brocardi.it, https://www.brocardi.it/codice-civile/libro-primo/titolo-iii/art43.html ("Il domicilio di una persona è nel luogo in cui essa ha stabilito la sede principale dei suoi affari e interessi"; "La residenza è nel luogo in cui la persona ha la dimora abituale"). The former text of Art. 2 para. 2 TUIR referred to these definitions. ↩
2. TUIR, Art. 2 para. 2, as amended by Art. 1 para. 1 of Legislative Decree No. 209 of 27 December 2023, text at Brocardi.it, https://brocardi.it/testo-unico-imposte-redditi/titolo-i/capo-i/art2.html ("per la maggior parte del periodo d'imposta, considerando anche le frazioni di giorno, hanno la residenza ai sensi del codice civile o il domicilio nel territorio dello Stato ovvero sono ivi presenti"; "il luogo in cui si sviluppano, in via principale, le relazioni personali e familiari della persona"; "Salvo prova contraria"). ↩
3. Agenzia delle Entrate, Circolare n. 20/E of 4 November 2024, summarized in FiscoeTasse, press review No. 1236, https://www.fiscoetasse.com/new-rassegna-stampa/1236-residenza-fiscale-persone-fisiche-novita-illustrate-dallade.html. ↩
4. FiscoeTasse, press review No. 1236 (above) ("viene riconosciuta prevalenza alle relazioni personali e familiari piuttosto che a quelle economiche"). ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of October 2026.