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We work with many clients living abroad for most of the year, and one of the questions we are often asked is how to consider the income produced abroad and then transferred to Italy.
Many of them wonder if such income can be declared only in the country where it was generated, or should it also be taxed in Italy?
First of all, it is useful to define when a person is a resident or not resident in the State.
For income tax purposes, individuals are considered residents when they are registered with the Registry of the Resident Population, or have their domicile (principal seat of his affairs and interests) for most of the tax period (therefore more than 183 days in a calendar year).
When this is the case, the taxpayer is subject to Italian taxation for his property and for the income he receives, irrespective of the place where it was generated.
If for more than 183 days, the subject is not registered among the resident population, he has no habitual residence and domicile in Italy, (for example, because he is employed in another country), then, in this case, he is a “non-resident”.
Consequently, as “non-resident,” he will be subject to Italian taxation only as regards the portion of income that is considered to be produced in Italy (whether it is income from employment or self-employment, capital, business, land, etc.).
Moreover, if while abroad, the taxpayer needed to transfer a sum of money to Italy (to pay management fees for some of his properties, for example), this sum would not be taxed in Italy, as it would not be considered income.
Our studies are available to help you find out more about this topic and all the issues related to it. Contact us.