An Italian subject who receives income abroad is required to pay taxes in Italy upon at least one of the following requirements:
being resident in Italy for at least 183 days a year;
be registered in the Municipal Registry of the population residing in Italy (not being registered with the AIRE);
have their domicile or residence in Italy in accordance with Article 43 of the CC (having in Italy the center of the affections, interests, etc.).
In fact, in order to determine the State in which a tax payer is required to pay income tax, reference must be made to the tax residence as this entails the obligation to pay taxes in Italy also on income produced abroad. This is in compliance with the principle of Worldwide Taxation according to which the subjects residing in Italy are taxed on a global basis on the income produced everywhere (articles 2 and 3 of the Consolidated Law on Income Taxes). Therefore, in the case in question, the tax payer, not having transferred residence abroad, is required to present the tax return in Italy also for income produced abroad, although the latter have already discounted taxes in England. To avoid, however, that the tax payer for the same income be taxed both in Italy and in England,
This article makes it possible to deduct the taxes paid in the United Kingdom in the Italian tax return up to the amount of the tax corresponding to the ratio between income produced abroad and total income. By way of example:
Tax rate in England: 20%
Tax rate in Italy: 23%
The tax payer in England 2,400 (12,000 x 20%)
The tax payer pays in Italy 360 from 2,760 (12,000 x 23%) less 2,400 already paid to the British tax authorities.
In addition, in the Consolidated Law on art.51, c.8-bis, in the case of work done abroad, subsidies are provided for. In the presence of certain requirements, the most favorable income expected from "conventional salaries" can be taxed rather than the income actually received. Ultimately, the tax payer is required to present in Italy the Income Statement indicating the income of employees and deducting the taxes paid in England.