- registration in the National Register of Resident Population;
- domicile in the Italian State within the scope of the Italian Civil Code (i.e. "principal place of business and interests");
- residence in the Italian State within the scope of the Civil Code (i.e. "habitual abode").
Where, as in the present case with respect to Switzerland, the tax residence is transferred to one of the countries included in the list of States or territories having a privileged tax regime set forth in the Ministerial Decree of 4 May 1999, the provision contained in Article 2, paragraph 2-bis of the same Article 2 of the TUIR becomes relevant, according to which, unless the taxpayer provides proof to the contrary, the tax residence is presumed to exist (still) in Italy for those who have transferred it to one of the aforesaid countries; As clarified in both of the above-mentioned speeches, under Italian law, therefore, even following formal registration in the Register of Italians living abroad (A.I.R.E.), the taxpayer will continue to be considered resident for tax purposes in Italy and subject to taxation there on all his income wherever produced, until such time as he is able to prove, during the assessment, that he is not domiciled or resident in Italy.
Until the aforesaid presumption is not overcome by the taxpayer, in cases where the same individual is resident, according to the respective domestic laws, in both countries, the provisions contained in the Double Taxation Agreement ("DTA") and in particular the provisions aimed at eliminating possible conflicts of residence between the two Contracting States (so-called "tie breaker rules") are relevant. "In the specific case of the DTA in force between Italy and Switzerland, reference must be made to paragraph 2 of Article 4, which resolves any conflict by establishing, firstly, the tax residence in the State where the individual's permanent residence is located and, secondly, the centre of vital interests, habitual residence and, finally, by giving prominence to the individual's nationality.
In cases of "dual tax residence", the provisions of paragraph 4 of Art. 4 of the same DTA, which provides, in the case of a transfer from one State to another during the course of the year, for the possibility of splitting the tax year, thus also dividing between the two countries the relative taxing power on the income produced by the same individual; for the purposes of the aforesaid division, the moment when the "new" residence takes effect and, consequently, the tax liability in the "arrival" State begins and that pertaining to the "departure" State ends, is identified and determined "as soon as the day of the transfer of residence has passed".
Recent policy clarifications (replies nos. 73/2023 and 173/2023)
The first policy to be illustrated (reply no. 73/2023) concerned the case of an individual who, although having transferred his residence to Switzerland on 1 June (date of entry into Switzerland), had been registered by the Italian municipality of departure in the A.I.R.E. only during the following month of August, thus being registered in the Register of Resident Population for a period exceeding 183 days and consequently having to be considered resident in Italy for the year in question for the purposes of domestic tax legislation.
With regard to this case, the Italian tax authorities, correctly applying the above-mentioned conventional provisions, proceeded to recognise that the transfer of residence had already taken place as of 1 June, with no relevance for conventional purposes of the subsequent registration with A.I.R.E.; consequently, applying the split tax period of the transfer, the taxpayer was considered to be resident in Italy until the date of 1st June (and taxed there until that date on all global income earned) and resident in Switzerland from the following 2nd June with the possibility for Italy, from that date, to tax the same taxpayer only on income earned in Italy pursuant to Article 23 of the TUIR.
In the subsequent reply No. 173/2023, on the other hand, it is necessary to highlight the manner in which the Revenue Agency applied the tie-break rules and, in particular, the clarifications provided with respect to the concept of permanent residence in relation to the case in point where the taxpayer, having moved to Switzerland in year X where he had rented a house, was also in possession of a family home located in Italy where he intended to stay for short periods also during year X.
In reiterating, in accordance with the OECD Commentary, that a permanent dwelling is to be understood as that which a natural person maintains and organises for permanent use, the Revenue Agency emphasises that what is relevant for these purposes is the circumstance that the individual, regardless of the type of dwelling and the legal title under which he disposes of it, has arranged for it to be used on a lasting and continuous basis and not occasionally for the purpose of a short stay.
On the basis of these principles, the Revenue Agency concludes its commentary by reiterating how the family home owned in Italy, even if it is at the taxpayer's disposal for a limited period (even) in year X, should not be considered as a permanent dwelling, as it is not possible to integrate a case of dual residence in Italy and Switzerland (i.e. the permanent dwelling is identified in the property rented in Switzerland).
Conclusions
Although not characterised by the affirmation of 'innovative' principles/clarifications, the policy measures have the undisputed merit of illustrating in a clear and straightforward manner the modalities by which cases of 'dual residence' must be resolved by applying the contractual provisions, thus representing a valid and useful vademecum to be kept in mind and referred to in the increasingly widespread cases of transnational personal mobility between Italy and Switzerland.
