ITALY Law and Practice Contributed by: Marco Valdonio and Gabriella Cappelleri, Maisto e Associati
Under the CbCR Decree, CbCR obligations may only apply to Italian-resident companies that belong to an MNE group with consolidated revenues that are EUR750 million or over (or a corresponding amount in the local foreign currency). An MNE group means a plurality (group) of enterprises, resident in different jurisdictions (or having permanent establishments in different jurisdictions), that are linked by a control or ownership relationship and are obliged to draft con - solidated financial statements according to domestic accounting principles (or that would be obliged to do so, if the shares of any of the enterprises were traded on a regulated market). The following entities are obliged to file CbCR under the CbCR Decree: • The Italian resident parent company of an MNE group (the “Parent”) – ie, the company obliged to draft consolidated financial statements accord - ing to its accounting principles and which is not controlled, whether directly or indirectly, by other enterprises of the MNE group. • Italian resident subsidiaries of an MNE group (the “Subsidiary”), if – (a) the non-resident parent company is not obliged to file CbCR in its state of residence; or (b) there is no qualifying automatic exchange of information (AEoI) agreement for CbCR pur - poses between Italy and the state of residence of the non-resident parent company; or (c) the IRA has notified the Italian resident Sub - sidiary that the state of residence of the Parent suspended the AEoI or repeatedly omitted to transmit the CbCR files to the IRA. Even if there is no qualifying AEoI agreement, an Ital - ian Subsidiary is, in any case, exempted from filing the CbCR in the following circumstances: • the MNE group has more than one subsidiary in the EU and designates another subsidiary to file the CbCR, provided that such subsidiary receives all the information needed to prepare the filing; • the MNE group voluntarily appoints a surrogate parent company to file the CbCR in its state of residence, provided that if the surrogate parent company is resident in a non-EU state, additional
requirements must be met (eg, it must be resident in a state with mandatory CbCR rules and with a qualifying AEoI agreement with Italy); or • the Parent voluntarily files CbCR with the tax authorities of its state of residence, subject to certain additional conditions (eg, the foreign state should enact CbCR legislation by the deadline for filing the first CbCR under the CbCR Decree). 9. Alignment With OECD Guidelines 9.1 Alignment and Differences As discussed in 1. Rules Governing Transfer Pricing , Italian transfer pricing regulations are substantially aligned with OECD Guidelines. Therefore, there are no notable differences to be highlighted. 9.2 Arm’s Length Principle Italian transfer pricing rules consistently apply the arm’s length principle under all circumstances. 9.3 Impact of the Base Erosion and Profit Shifting (BEPS) Project As discussed in 1. Rules Governing Transfer Pricing , Italian transfer pricing regulations have been amended in order to better align the rules with the best inter - national practices (ie, OECD Guidelines as amended Italy has been contributing to the collective effort to redefine international tax rules for the digital economy since its inception in the OECD. Indeed, it participated in the discussions that led the OECD and the G20 to adopt the first report on the taxation of the digital economy, consisting of Action 1 (Addressing the tax challenges of the digital economy) of the action plan, developed by the OECD to counter the phenomena of BEPS. following the BEPS project). 9.4 Impact of BEPS 2.0 In 2021, Italy first chaired the G20, a privileged discus - sion forum for the world’s major economies, which has supported the work carried out so far at the OECD. Under the Italian presidency of the G20, on 8 October 2021, a historic agreement was reached between 136 countries of the OECD/G20 Inclusive Framework on a
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