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Italian Guidelines on Transfer Pricing Documentation


Up to May 2010 official guidelines for transfer pricing documentation were not provided by Italian regulations. Moreover, after the introduction in Italy of the unilateral APA process in 2004, the Revenue Agency did not issue any instruction about documents required to take advantage of the APA process. Taxand Italy discusses the move to attaining transfer pricing documentation and benefits for multinationals.

Now, a new law has been enacted which states the official transfer pricing documentation requirements will soon be set out by dispositions of the General Director of the Revenue Agency. According to the law, these dispositions will be issued within 60 days after the law-decree is definitely passed. Since it is expected that such law-decree will be passed about the end of July 2010, the dispositions by the Revenue Agency are expected by the end of September.

Apart from the fact the documentation requirements will be in line with the ones contained in the OECD Transfer Pricing Guidelines, as well as in the Code of Conduct on transfer pricing documentation for associated enterprises in the European Union, no other information has been made available.

These documents, when available, will prove helpful providing evidence on what to look for when applying the correct price to transactions with related companies, such as:

  • description of the group's business
  • description of the relevant transactions
  • contents of the agreement between the related parties
  • functions performed, assets used, risks taken by the companies involved
  • explanation of the selection and application of the transfer pricing method
  • relevant information on comparable search criteria which have been applied

Moreover, the law provides that even though a higher income will be assessed during a tax audit due to transfer pricing rules, penalties will not be applicable if the taxpayers are in a position to deliver to tax inspectors the documentation provided by those dispositions of the General Director of the Revenue Agency.

Taxand's Take

The introduction of the much awaited Italian guidelines on Transfer Pricing presents a great opportunity for multinationals since they will now have precise instructions on how to operate in Italy. It will only be a matter of time before the official transfer pricing documentation requirements are fully set out.

Your Taxand contacts for further queries are:
Guido Arie Petraroli
T. +39 02 7260 591

Maurizio Busecchian
T. +39 02 7260 591

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