Federico Vincenti and Alessandro Valente of Crowe Valente/Valente Associati GEB Partners explore the complex relationship between Italy’s domestic tax dispute resolution mechanisms and OECD and EU directives on mutual agreement procedures.
Read MoreFederico Vincenti and Alessandro Valente of Crowe Valente/Valente Associati GEB Partners explain the rationale behind Directive (EU) 2021/2101 and what it means for MNEs.
Read MoreFederico Vincenti and Alessandro Valente of Crowe Valente/Valente Associati GEB Partners analyse the recent ruling that clarifies the most appropriate TP method for determining the arm’s length principle.
Read MoreIn recent years, this firm has assisted in an increasing number of tax audits related to transfer pricing matters, permanent establishment issues, and VAT fraud, among others. Considering this rise in audit activity, the Italian Tax Revenue Agency’s Circular No. 21/E that was published on June 20 2022 is a highly relevant document in providing additional guidance concerning tax audit activities for 2022.
Read MoreFederico Vincenti and Alessandro Valente of Valente Associati GEB Partners/Crowe Valente explain how Circular Letter No. 16/E will affect transfer pricing (TP) calculation in Italy.
Read MoreThe Italian Revenue Agency published a circular aimed at providing clarifications on the subject of transfer pricing (TP) documentation on November 26 2021. The circular took into account the comments made by professionals during the public consultation that ended on October 12 2021.
The purpose of the circular is to provide further operational instructions on the new features introduced by the regulation published on November 23 2020, regarding the suitability of the declaration which allows companies to make use of the penalty protection.
Published in: ITR (International Tax Review) - 9 December 2021
On September 20 2021, the Italian Revenue Agency (IRA) published the draft circular letter (the Circular) aimed at providing a vast range of clarifications on the transfer pricing (TP) documentation’s legal framework.
The Circular has been drafted to provide further operational instructions on the changes introduced by the Administrative Provision No. 360494 of November 23 2020 (containing the new rules on TP documentation).
The Circular was released for public consultation for comments and proposals. The consultation closed on October 12 2021.
One of the most significant changes concerns the obligation of digital signature with the time stamp of the master file and local file. Indeed, before the date of submission of the tax return for the relevant tax year (i.e. November 30 2021), the two documents must be digitally signed and temporally marked by the legal representative of the taxpayer or his delegate.
Published in: ITR (International Tax Review) - 21 October 2021
In early 2021, two decisions of the Italian Supreme Court dealt with the issue of certain inter-company transactions that were not performed according to the arm’s-length principle due to the existence of an overall advantage for the multinational group.
Published in: ITR (International Tax Review) - 28 april 2021
The mutual agreement procedure (MAP) is an instrument for the resolution of international tax disputes whenever a person considers that the actions of one or both of the contracting states’ tax administrations result or will result in taxation not in accordance with the provisions of a tax convention or of a tax treaty.
To this end, the MAP allows competent authorities designated from the governments of the contracting states to interact with the intent to resolve the international tax dispute. On October 10 2017, the Council of the European Union issued Directive (EU) 2017/1852 with the purpose of increasing tax certainty in the single market. With Legislative Decree No. 49/2020 published on June 10 2020, the Italian legislator approved the decree implementing EU Directive 2017/1852.
Published in: ITR Transfer Pricing Special Focus 2021 - 24 March 2021
Advance tax agreements are binding agreements between taxpayers and the Italian Revenue Agency aimed at enhancing tax compliance and promoting the business of multinational enterprises by providing certainty on international tax issues in advance.
The arrangements are based on mutual cooperation and transparency between taxpayers and the Italian Revenue Agency. An advance tax agreement may be requested by resident companies conducting international activities, meeting a set of requirements.
The 2021 Italian Budget Law modified the advance pricing agreement (APA) procedure, including new aspects about the ‘roll-back’ and providing the payment of a fee in order to start these procedures.
Published in: ITR Italy Special Focus 2021 - 16 March 2021
The 2021 Budget Law introduced significant innovations regarding advance rulings (including advance pricing agreements) provided for by Italian legislation (Article 31-ter of D.P.R. No.600/1973).
Through the instrument of advance rulings, companies with international business activities can enter into agreements with the Italian tax authorities, in relation to the following instances:
a) Prior definition of the transfer pricing methods applicable in intercompany transactions;
b) Exit or entry values in the event of transfer of residence;
c) Attribution of profits and losses to the permanent establishment in another country of a company resident in Italy or to the permanent establishment in Italy of a non-resident entity;
d) Prior assessment of the existence or otherwise of the requirements for a permanent establishment situated in Italy; and
e) Application to a concrete case of rules, also of conventional origin, concerning the payment or receipt of dividends, interest and royalties and other income components to or from non-resident parties.
Published in: ITR (International Tax Review) - 3 February 2021
On November 23 2020, the Italian Revenue Agency published a provision by which it amended the Italian regulation on transfer pricing documentation, making it more compliant with the OECD Transfer Pricing Guidelines.
The new measures replace those of the provision of September 29 2010 and are applicable from the 2020 tax period. The preparation of transfer pricing documentation remains optional for Italian companies. In the case of the predisposition of suitable documentation, companies can benefit from the so-called penalty protection in case of transfer pricing adjustments by the Italian tax administration.
Published in: ITR - 2 December 2020
With Legislative Decree No. 49/2020 published on June 10 2020, the Italian legislator approved the decree implementing EU Directive 2017/1852 on the resolution of disputes in EU tax matters.
By means of this legislative decree, the rules relating to mutual agreement procedures have been transposed into Italian law related to:
The international conventions to avoid double taxation stipulated with EU member states; and
The convention 90/436/EEC of July 23 1990 on the elimination of double taxation in connection with transfer pricing.
Published in: ITR - 28 August 2020
On 11 February 2020, the OECD published the “Transfer Pricing Guidance on Financial Transactions” document (hereinafter “Report”).
The Report, which will constitute the new chapter 10 of the OECD Transfer Pricing Guidelines, provides specific guidelines on how to apply the arm’s length principle for financial transactions.
The publication of the Report is of greater relevance in view of the period of crisis triggered by Covid-19.
As such, one of the main impacts for multinational groups concerns liquidity management.
In order to ensure full operability, companies need to manage their financial resources in the best possible way. This is performed by:
taking actions by increasing the management efficiency of the receivable and payable accounts
the utilisation of public support such as:
tax measures (i.e. suspension of tax obligations, suspension of the terms of the activities of collection offices, tax credit)
financial support measures (i.e. wage compensation funds, access to public sector subsidies to businesses)
taking actions aimed at finding additional resources of private financing.
Published in: Crowe TP Wednesday - 03 June 2020
Inter-company financial transactions
During periods of crisis, the financial sector may experience significant repercussions on transactions. The disruption to normal activity leads to a lack of liquidity and extra limits on external financing, potentially making financial transactions unprofitable.
Hence, in this context, multinational companies are increasingly using centralised treasury techniques in order to optimise and rationalise their financial function.
One of the areas of particular concern to tax authorities is in regard to inter-company financing. In particular, where it relates to an intra-group loan, which is considered to comply with the principles of free competition whenever the interest rate applied is equal to the one that would have been applied between independent parties.
Published in: International Tax Review (ITR) - 1 May 2020
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