Clarification on TP Documentation in Italy Starts Moving Forward

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

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Assessing the Tax Treatment of Employees Working in Italy during the Pandemic

In a response to the disruption caused by the COVID-19 pandemic, governments have enacted unprecedented measures. As such, these measures may have an overwhelming impact on the tax residence of individuals and on the tax treatment applicable to income from employment.
On July 7 2021, the Italian tax authorities issued Ruling No. 458/2021 which deals with the tax treatment of workers that temporarily returned to Italy as a result of the COVID-19 pandemic and could not leave the country due to the travel restrictions enforced by China.
In the ruling, the Italian tax authorities were presented with a case involving a series of employees that were hired by the Italian parent company and seconded to the Chinese subsidiaries. Such employees moved to Italy in January 2020, as the pandemic broke out in China, and returned to China in July of the same year.

Published in: ITR (International Tax Review) - 27 July 2021

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Italian Supreme Court Rules on uneconomical inter-company Transactions

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

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The Importance of Mutual Agreement Procedures in International Tax Disputes

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

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A Review of Advance Tax Agreements in Italy

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

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Rethinking the Top-Line and Realignment of the Bottom-Line in a Post-Covid Landscape

As many countries around the world are facing the second wave of the Covid-19 crisis, and given the evolving restrictive measures imposed by governments to contain the global outbreak, companies should keep as their top priority to continue monitoring the shifts in customer preferences and attitudes towards risk in order to detect and understand the changes in the nature of demand.

In the last year, in the majority of markets, companies have experienced a change in the way that customers purchase goods and services, hence it has been crucial for companies to change, accordingly the way they do business. The resurgent crisis is serving as a catalytic agent that is accelerating the transformation of the nature of the relationship between companies and consumers. The catalytic effect is providing a tipping point to shrink the cultural lag (Ogburn, 1957) which is often associated with major technological change. In fact, one of the primary challenges for businesses today is to capture the evolving customer needs and expectations, hence moving ever closer towards a customer-centric approach.

Published in: Management Consulting Journal (Institute of Consulting) - 17 February 2021

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Italy Amends Regulation of Advance Rulings

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

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Italy Publishes Updated 2020 Transfer Pricing Documentation Guidance

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

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Piergiorgio Valente Re-elected as President of the CFE Executive Board for 2021 - 2022 - CFE Tax Advisers Europe

CFE Tax Advisers Europe is pleased to announce that a new Executive Board for the period of 2021-2022 was elected at its online General Assembly on 25 September 2020.
The new Executive Board will take up their duties on 1 January 2021. The General Assembly, the governing body of CFE Tax Advisers Europe, unanimously re-elected Piergiorgio Valente as President (Managing Partner, Valente Associati GEB Partners and Crowe Valente, and Professor at Link Campus University, Rome, Italy).
Martin Phelan was also unanimously re-elected as Secretary-General (Partner, Head of William Fry Tax Advisers, Ireland), as was Branislav Kováč in the position of Treasurer (Partner VGD SLOVAKIA, s.r.o., Board Member of the Slovak Chamber of Tax Advisers, Slovakia).

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Piergiorgio Valente named as Tax Controversy Leader in World Tax’s dedicated Leaders series

Piergiorgio Valente of Valente Associati GEB Partners/ Crowe Valente - Italy named as Tax Controversy Leader in World Tax’s dedicated Leaders series

Tax Controversy Leaders

has recognized Piergiorgio Valente as a highly regarded tax controversy adviser.  

The Tax Controversy Leaders guide identifies the leading individuals working in tax controversy around the world, as selected by their fellow tax professionals. Market leaders chosen by market leaders. This year, the guide covers more jurisdictions, reaches out to more individuals and recognises more practitioners than ever before – from rising stars just making a name for themselves to market leaders with decades of experience behind them.

Any World Tax firm rankings or individual advisor ratings awarded to Valente Associati GEB Partners can be accessed here: https://www.itrworldtax.com/Lawyer/Valente-Associati-GEB-Partners-Crowe-Valente/Piergiorgio-Valente/Profile/2090#profile

For more information about Tax Controversy Leaders, please visit https://www.itrworldtax.com/

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Mutual Agreement Procedure Rules Transposed into Italian Law

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

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COVID19: The Challenges for International Taxation

Introduction

Except for the unprecedented health crisis, the COVID-19 spread has generated the biggest economic and financial shock of the century across markets and cross-borders. The preventive and reactive mechanisms developed by national governments and international and supranational organizations to respond to the crisis give in turn rise to a plethora of tax questions.
It is critical for businesses to understand how the various measures adopted impact on the tax systems and how these have transformed to react to the shock. As such, they will be able to ensure tax compliance while also taking advantage of any relevant tax incentives. Such exercise is particularly challenging, taking into account the complexity of the measures and the various levels in which they have been/are being developed: international, EU and national.

Published in: Kluwer International Tax Blog - 6 August 2020

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Italien: Steuervorbescheid für Neuinvestitionen - Mehr Rechtssicherheit bei Investitionen

Mit Gesetzesdekret Nr. 147/2015 sollen Investitionen in Italien gefördert werden. Dafür erhalten Unternehmen und Einzelpersonen die Möglichkeit, ihre Aktivitäten auf italienischem Staatsgebiet in bewusster Kenntnis des geeigneten Besteuerungsmodells zu planen. Es wurden ein sog. Cooperative Compliance Program und ein Advance Ruling on New Investments (Steuervorbescheid für Neuinvestitionen) eingeführt. Damit soll der Dialog mit dem Steuerpflichtigen verbessert werden und ihm mehr Sicherheit bei der Bestimmung der steuerlichen Belastung im Zusammenhang mit relevanten und dauerhaften ausländischen Investitionen in Italien gegeben werden.

Published in: NWB Datenbank - IWB Nr. 10 - 29 May 2020

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New OECD Guidance on Financial Transactions

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

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Assessing Inter-Company Transactions and Accounting Implications during Economic Uncertainty

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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