ITALY Law and Practice Contributed by: Marco Valdonio and Gabriella Cappelleri, Maisto e Associati
7. Advance Pricing Agreements (APAs) 7.1 Programmes Allowing for Rulings Regarding Transfer Pricing In Italy there is an APA programme allowing taxpayers with international activities to: • determine the most appropriate transfer pricing methods and criteria applicable to the transactions carried out with related parties, according to Article 9 of the OECD Model Convention as provided for by Article 110 (7) ITC (APA); • define the entry or exit value of assets when the entity transfers its residence in or out of Italy; • assess in advance of a non-resident company starting a new business in Italy whether the condi - tions for it to exist as a permanent establishment in Italy are met; • define the tax law provisions, including DTT provi - sions applicable to cross-border items, regarding the tax treatment of income (such as dividends, interests, royalties or other income items) paid to/ received from non-resident companies; and • define the attribution of profits to a permanent establishment in Italy of a non-resident company or to a permanent establishment in another state of a resident company. APA programmes can be: (i) unilateral, when they involve only the taxpayer and the IRA; or (ii) bilateral or multilateral, when they involve the taxpayer, its foreign counterparty(ies), the IRA and one or more foreign tax authorities, covering all the DTT matters, including transfer pricing. Bilateral and Unilateral APA Procedure The unilateral APA procedure is regulated by Article 31-ter of Presidential Decree No 600/1973 and by its implementing regulations issued by the IRA Director on 16 March 2016 (the “2016 Regulations”). For the bilateral and multilateral APA procedure, the govern - ing provisions are the above-mentioned Article 31-ter of Presidential Decree No 600/1973 to be read togeth - er with the relevant DTT (in particular, the rule corre - sponding to Article 25 (3) of the OECD Model Conven - tion, which provides for mutual agreement procedures (MAPs) between the tax authorities of the contracting states aimed at avoiding double taxation).
islative Decree No 13 of 12 February 2024 (“Article 3”). In the event of common or complementary interest, this provision expressly allows the Italian tax authori - ties to carry out multilateral and simultaneous audits in co-operation with the tax administrations of other member states, each within its own territory, ensuring co-ordinated audit activities and structured exchang - es of information between the competent authorities throughout the audit process. Italy does not cur - rently provide for formalised enhanced programmes specifically dedicated to multilateral or simultaneous controls. Communication during the audit is ensured through the designation of a representative responsi - ble for directing and co-ordinating the simultaneous controls, as well as through ongoing exchanges of information between the participating tax administra - tions. The tax authorities may propose a simultaneous audit in respect of one or more independently identi - fied taxpayers and are required to accept or reject proposals received from other competent authorities. The tax authorities may also conduct simultaneous audits with the tax authorities of third jurisdictions with which a bilateral or multilateral treaty permitting such co-operation is in force, subject to the accession of the foreign authorities. Unlike joint audits, simultane - ous audits do not require the participating tax admin - istrations to reach a common conclusion or to issue a jointly agreed final report. Each tax administration remains competent to carry out the audit activities within its own territory and to adopt its own assess - ment, on the basis of the information exchanged dur - ing the simultaneous audit. 6.4 International Compliance Assessment Programme (ICAP) Italy participates in the OECD International Compli - ance Assurance Programme (ICAP) as a support - ing tax administration. Through ICAP, the Italian tax authorities engage in multilateral, voluntary risk assessment processes co-ordinated by the OECD, aimed at providing participating multinational groups with increased tax certainty on transfer pricing and permanent establishment risk areas. Italy’s involve - ment is framed within the broader co-operative com - pliance and international administrative co-operation framework, complementing domestic tools such as advance pricing agreements and mutual agreement procedures.
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