What are the conditions that determine the obligation for a person to pay taxes in Italy?
This is the question that arises from the reading of the recent Ordinance of the Italian Supreme Court, Tax Section, No. 11620 of January 29, 2021.
In fact, it is a more frequent case than one can imagine even if we free from the field the question concerning the taxation of income taxes of large taxpayers, in particular, of famous people, such as the tenor Luciano Pavarotti who moved his residence from Modena to Monte Carlo by registering with the Registry of Italians Residing Abroad, thinking that this was the only way to resolve the issue of paying taxes in Italy, but probably he or his consultants, did not believe that the whole issue was much more complex than as they saw it.
In fact, the Ordinance in the matter suddenly detects a curious aspect which, however, leads back to the general principles: the taxpayer’s diary.
It is evidently intended to demonstrate that the taxpayer was, in the years in question, present in various municipalities in Italy, including in various shopping centers, and that she had made numerous trips, even with her husband, between the country where she said she had fixed his residence (Canary Islands – Spain) and Italy, even his repeated presence at an agricultural company in Italy was noted, and again, the numerous offices held in various Italian collective and moral bodies, companies, trusts, and then accounts currents in Italian banks, all these facts leading to the deduction that Italy was certainly the center of his business and interests.
So, as the Ordinance states, it seems logical that for the purposes of ascertaining tax residence in Italy, it must be verified whether, in the period taken into consideration, the natural person has established or maintained his domicile in Italy, as governed by the article 43 of our Civil Code, that is, the stable establishment in the territory of the State, for most of the tax period, of the place of management of one’s interests and business, recognizable to third parties.
In conclusion, the question concerns the true conduct of people’s lives, for the purposes of taxation of their income, and not what they declare in this regard according to formalities in the Public Offices.