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 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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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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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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Performing a Comparability Analysis during an Economic Downturn

Since December 2019, countries have witnessed the widespread impact of COVID-19 on economic activity, global value chains and profitability across most industries and geographical areas.
As is the case in all periods of uncertainty, as governments try to tackle the crisis with measures that stimulate economic growth such as tax reliefs and investment incentives, tax authorities have focused to a greater extent on setting transfer pricing (TP) policies in order to verify the reason and the nature of the contraction registered in the financial statements of firms.
Hence, companies undertaking inter-company transactions should adapt their TP models to the current economic and financial conditions, in order to ensure that internal policies reflect the potential reallocation of functions, activities and risks within the multinational group.

Published in: International Tax Review (ITR) - 24 April 2020

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Adapting Transfer Pricing Policies to Cope with COVID-19

The outbreak of COVID-19 has become one of the largest threats to the global economy and financial markets in history.
In this context, the change in economic conditions has resulted in significant consequences for the transfer pricing (TP) policies adopted by multinational groups, which are forced to promptly adapt their business models.
This rationale appears to be even more relevant in a globalised world where recessionary circumstances affecting a single country or a single market, spiral to generate an unforeseen amount of consequences at a global level.

Published in: International Tax Review (ITR) - 26 March 2020

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The Impact of TP Policies on Managing a Company in Crisis

The Italian government, with Legislative Decree No. 14 on January 12 2019, approved the new Code of Business Crisis and Insolvency (the Code).

The novelties of this Decree are the tools and mechanisms included for warning and preventing the crisis. In this way, the Legislator has tried to comply with the guidelines expressed by the European Commission on a new approach to manage business failures and insolvency (2014/135/EU).

According to Article 13 of the Code, any income, equity or financial imbalances, in relation to the specific characteristics of the company and the entrepreneurial activity carried out by the company, are identified as “crisis indicators”, taking into account the date of incorporation and the start of the activity.

Published in: TPWeek - 31 may 2019

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