Italy's Council of Ministers has given preliminary approval to significant changes in the definitions of tax residency for both individuals and corporations.

Article 1 of the draft decree replaces the civil-law criterion of domicile for individuals with a tax-specific definition. It will be defined as the place where the individual's personal and family relations are 'primarily developed'.

Under Law No. 111/2023, individuals will be considered tax-resident if they are physically present in Italy for the greater part of the tax period, including fractions of a day, or if Italy is their habitual abode or place of primary personal and family relations.

The previous criterion of considering individuals tax-resident if they are registered as a member of the resident population 'for the greater part of the tax period' also remains relevant, but only as a rebuttable presumption until disproved.

The changes...