Expenses-based income assessment method, tax residence and automatic information exchange

Luca Cerioni

Research output: Contribution to journalArticlepeer-review


This article analysis, firstly, whether the income assessment method based on items of expenses borne by the taxpayer – a method which is provided for by Italian Tax Law for detecting an overall income than that accounted for by the income declared – can be applied towards taxpayers which are in a dual tax residence situation or which are not tax residents in Italy. In this respect, the work argues that the method’s very purpose of determining the overall (worldwide) income contrasts with the source taxation applied to non-residents, and that in the event of dual residence it is necessary to distinguish according to whether Italy has a double tax convention with the foreign country at stake. The article subsequently considers the case of taxpayers residents in other EU Member States which, in Italy, are in a situation comparable with the situation of Italian tax residents, and examines to what extent this income assessment method could coexist, for resident taxpayers obtaining income in other Member States, with the automatic exchange of information set out by Art. 8 of Directive 2011/16/EU. In this respect, because the automatic exchange of information ultimately shares – with regard to intra-EU incomes – the same anti-evasion purpose as this income assessment method, it is ultimately argued that the automatic information exchange could raise challenges (to the application of this method) that were certainly not considered by the Italian tax legislator when the method was introduced.
Translated title of the contributionExpenses-based income assessment method, tax residence and automatic information exchange
Original languageItalian
Pages (from-to)328-360
JournalDiritto e Pratica Tributaria Internazionale
Issue number3
Publication statusPublished - 2014


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