Tax domicile as the principal place of business and interests

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The notion of tax domicile must be interpreted and evaluated in relation to the place where the individual maintains both personal and economic relations.

This is what emerges from the order filed by the Supreme Court last June 6, which, in truth, follows the well-established line of jurisprudence according to which, for the purpose of determining the tax domicile, personal/familial elements, as well as economic ones, must also be taken into consideration.

As a reminder, under domestic tax law, individuals who for the majority of the tax period meet at least one of the following three conditions are considered residents:

  • registration in the Registers of Resident Population (APR or ANPR) – formal requirement,
  • domicile in the territory of the State under Article 43 paragraph 1 of the Civil Code – substantive requirement,
  • residence in the territory of the State under Article 43 paragraph 2 of the Civil Code – substantive requirement.

In the case analyzed by the Court of Cassation, the Tax Administration challenged the tax residence of an Italian citizen – registered with AIRE (Anagrafe degli Italiani Residenti all’Estero) and resident in Switzerland – employed by an employer based in Italy: in particular, according to the Revenue Agency, the taxpayer should have been considered an Italian resident for tax purposes given his position as managing director of a company with 3 factories located in Italy which, necessarily according to the Tax Administration, required a stable presence – and, therefore, a connection – in Italy.

The Regional Tax Commission and the Court of Cassation rejected the interpretation of the Revenue Agency, holding that the person was a tax resident in Switzerland, a place where he had established his center of vital interests since, together with his household, he habitually resided there and where he was the holder of a mortgage for the purchase of the home, multiple household utilities and where, in addition, his son attended University and his wife worked.

In conclusion, therefore, taking into account the various elements deduced and proven by the individual at hand regarding his residence for tax purposes, it is correct to hold that – in line with what has been affirmed by the jurisprudence of merit and confirmed by that of legitimacy – the overall assessment of the appellant’s personal and economic elements is sufficiently probative of his Swiss residence.