ITALY Law and Practice Contributed by: Marco Valdonio and Gabriella Cappelleri, Maisto e Associati
renewed scrutiny regarding the potential existence of a permanent establishment, particularly in structurally fragmented asset management arrangements. 11.4 Financial Transactions Italian laws do not provide any provision about finan - cial transactions. The Ministerial Decree, dated 14 May 2018, set out general guidance for the correct application of the arm’s length principle in line with international best practices making explicit reference to the OECD Guidelines (of July 2017). It also pro - vides, pursuant to Article 9, that any additional imple - menting arrangement must be provided for by one or more Commissioner Decision, taking into account the provisions of the OECD Guidelines as regularly updated. However, even if no Commissioner Deci - sion has been issued, the approach is currently that of following the provisions included in Chapter X of the OECD Guidelines. 12. Co-Ordination With Customs Valuation 12.1 Co-Ordination Requirements Between Transfer Pricing and Customs Valuation There are no specific rules requiring co-ordination between transfer pricing and customs valuations; it is worth mentioning that the Italian Customs and Duty Agency provided high level guidance in Circular 6 November 2015, No 16 regarding the customs valua - tion of the transactions between related parties. 13. Controversy Process 13.1 Options and Requirements in Transfer Pricing Controversies Italian laws do not provide for a specific controversy process for transfer pricing matters. Accordingly, gen - eral rules apply. Administrative Tax Assessment As a rule, in the case of a tax audit (which can be per - formed both by the IRA and the Guardia di Finanza ), the tax auditors serve the taxpayer with a tax audit report (the “Report”) which describes the outcome of the audit activity and the findings of the auditors.
The Report is not enforceable against the taxpayers and does not contain a request for payment of higher taxes and/or penalties, as it is just the basis for the IRA office competent for assessment to evaluate the matter and form its view. However, upon receipt of a Report the taxpayer has the option to accept wholly (with or without conditions) the content of the Report with a reduction of penalties to one sixth. Before issuing an assessment notice, the IRA serves the taxpayer with a draft tax assessment (“Draft Assessment”) which, like the Report, is not enforce - able but can be the start of an interaction between the taxpayer and tax authorities. The Draft Assessment does not need to replicate the contents of the Report. In certain cases (eg, desk analyses) the Draft Assess - ment is not preceded by a Report, but potentially just by a questionnaire sent by the IRA to the taxpayer to gather the relevant transfer pricing documentation. Upon receipt of a Draft Assessment, the taxpayer has the following options: • to file observations/comments to the competent IRA office (the law provides a 60-day freezing period after the issue of the Draft Assessment dur - ing which the IRA cannot issue a tax assessment notice to give the taxpayer time to provide obser - vations); and/or • to submit a formal application to start discussions with the competent IRA office to redetermine the findings in a settlement procedure. In all cases, until a final tax assessment notice is issued, the taxpayer also has the faculty to accept wholly or partially the findings of the Report and/or the Draft Assessment, by self-correcting the violations by paying the amount due (higher tax and interest) plus reduced penalties, and to submit amended tax returns. To raise an enforceable claim against the taxpayer, the IRA issues a tax assessment notice (the Guardia di Finanza are not entitled to issue tax assessments). Note that, in certain cases, a tax assessment notice could also be issued in the absence of previous audit activity.
112 CHAMBERS.COM
Powered by FlippingBook