The Italian Supreme Court, with its ruling n. 8196 of April 22, 2015 held that a NY corporation, wholly owned by an Italian company, and effectively managed and controlled by its Italian shareholders and directors in Italy, had to be treated as an Italian resident company for Italian tax purposes, and was subject to corporate
Italy’s Tax Residency for Foreign Investors
Italy’s tax residency for foreign taxpayers buying Italian real estate, and spending significant time in Italy for pleasure or business continues being a very critical and challenging issue. Italy assigns tax residency of individuals based on residence, which means fixed place of living ; domicile, which means main center of interests, or registration on the…
Italy’s Supreme Court Holding That Economic Interests Prevail Over Personal Ties In Determining Italian Tax Residency
Italy’s Supreme Court’s decision n. 6501 of March 31, 2015, dealing with the case of an Italian citizen who had most of his personal and family connections in Italy but moved to work in another country (Switzerland), where he had most of his economic and financial interests, ruled that the taxpayer’s economic and financial connections…
Italian Supreme Court Rules on Individual Tax Residency
The Italian Supreme Court in its Ruling 20285 dated September 4, 2013 held that an individual taxpayer claiming to have his tax residency outside of Italy had properly discharged his burden of proof and correctly established his tax residency abroad by producing copy of his residential lease, regular payments of rent and utility bills and use of personal bank account for day to day expenses, thereby proving that his actual and real residence and domicile was located in the foreign country.
Under Italian tax law, individual tax residency is determined pursuant to highly factual tests and can be established even when there are relatively minor contacts with Italy, such as a house, frequent visits to the country, or business interests located there. Once determined, it subjects the taxpayer to worldwide taxation in Italy both for income and estate tax purposes including the obligation to report all of taxpayer’s assets wherever located in the world under a form that is the equivalent of the american foreign bank account report, except that it requires reporting of non financial assets (such as cars, houses, planes, artworks, etc.) as well as financial assets and accounts. Foreign persons with interests in Italy must pay particular attention to those rules to avoid to be trapped into unintended Italian tax residency.
Under the facts of the case decided by the Supreme Court, the taxpayer – a tennis player originally resident in Italy – claimed to have moved his tax residency to Monaco, while still traveling to Italy and other countries in connection with his business interests and professional activity.
Under Italian law, Monaco is a tax haven, black listed jurisdiction and Italian taxpayers who register as residents there are presumed to be still resident in Italy for Italian tax purpose, unless they prove that their actual residence and domicile is located in that country. For this purpose, residence identifies the taxpayer’s habitual and regular place of living, while domicile identifies the taxpayer’s main center of personal, financial and business interests.
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European Commission Blesses Italy’s Anti-Inversion Rules
The European Commission confirmed that Italian anti inversion rules treating foreign companies owned or controlled by Italian national and owning or controlling Italian companies as Italian resident companies subject to tax in Italy do not violate EC law to the extent that they are designed to combat tax evasion and provide taxpayers with a reasonable opportunity to rebut the tax residency presumption and treat the foreign company as foreign and outside Italian tax net…
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Italy Removed Malta and Cyprus from Black List
Italy removed Cyprus and Malta from black list for purposes of CFC rules and Italian rules on tax residency of individuals.
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Italy’s Supreme Court Rules Against Fictitious Foreign Tax Residency
Italy’s Supreme Court ruled against taxpayer in a case concerning use of fictitious tax residency for tax avoidance purposes. Italy was held to be the real tax residency as the place where taxpayer had maintained his center of main interests…
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Italy’s Tax Administration Rules on Change of Tax Residency During a Tax Year
Italy’s Tax Administration rules that an individual who leaves Italy and moves to a foreign country in the second half of the year remains resident in Italy for tax purposes until the last day of the year…
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