Tax Law – Employment income earned by a non-resident – Taxation of income not produced in Italian territory –Taxation Treaty between Italy and Germany – Verification of actual working days in the contracting state – Burden of specific challenge. Second Instance Tax Court of Abruzzo, Section 7, Judgment No. 22/2025.

In the case concerning the refund of taxes withheld from the salary of a worker residing in Germany and employed by an Italian company, with duties also performed outside Italian territory, the Supreme Court affirmed the legal principle that, pursuant to the DTT between Italy and Germany, taxable income in Italy must be determined based on the ratio between the working days performed abroad and the total period of employment to which the remuneration is referred. To identify the place where the work activity justifying taxation in the contracting state is deemed to have been carried out, one must consider the location where the employee is physically present when performing the activities for which they are remunerated. What matters is not the actual taxation suffered by the worker, but the potential liability to tax in the state of residence. By judgment no. 22 filed on January 17, 2025, following the referral proceedings, the Second Instance Tax Court of Abruzzo upheld the taxpayer’s original appeal for the refund of the tax and found that the taxpayer’s residence in Germany was proven on the basis of the certificate issued by the German tax authority. The Court further held that the Italian Tax Authority had not specifically contested the calculation of the days during which the taxpayer had performed work in Italy ( https://www.mattarelli.eu/wp-content/uploads/2025/09/sentenza-22-2025-CGTII-Abruzzo-1.pdf).