Tax residency in the Conventions against double taxation

To avoid double taxation on income and on capital, many EU and extra-EU Countries have entered into bilateral Conventions which establish the ways in which the taxing power must be divided between two contracting States, regulating the fiscal treatment of individual income categories. These Conventions provide the possibility for both States to levy a tax on the same income (concurrent taxation), or an exclusive taxation by a single State. Generally, the agreements are drawn up on the basis of the models compilated by the OECD (Organism for Economic Cooperation and Development), which deals with the periodic updating.

Italy is among the contracting Countries and all the Conventions for avoiding the double taxation become part of the legal system following a ratification procedure by the Parliament followed by ordinary law, which gives full and integral execution to the agreement.

In respect to the taxation of income in Italy, art. 3 of Presidential Decree 917/86 (TUIR) establishes that the tax is applied to the total income of the natural persons, consisting, for residents, of all income owned net of tax deduction and, for non-residents, only of those produced in the Italian Country.

Therefore, the definition of tax residence is more important and it is contained in art. 2, c. 2, of the TUIR. In particular, natural persons are considered fiscally resident ...