ITALY Trends and Developments Contributed by: Paolo Ludovici, Luca Tortorella, Marlinda Gianfrate and Angelica Masciulli, Gatti Pavesi Bianchi Ludovici
Introduction Although 2025 was not a year of great legislative or policy developments for the Italian transfer pric - ing framework, transfer pricing has continued to increase in importance in Italian tax practice. Recent years have seen the emergence of case law apply - ing domestic rules and bilateral treaties to specific factual situations, contributing to a growing body of court decisions. This increase is driven by the audit activities carried out by the Italian tax administration, which has consistently generated a number of transfer pricing disputes. At the same time, taxpayers’ interest in mutual agreement procedures (MAPs) continues to grow, as shown by the OECD statistics (398 cases closed and an 870-MAP caseload in 2024, the latest No domestic guidance or rulings specifically related to transfer pricing were released during 2025 by the Italian tax administration. The Italian transfer pricing framework is aligned with Article 9 of the OECD Model Tax Convention on Income and Capital and with international best prac - tices. The OECD Transfer Pricing (TP) Guidelines, as periodically updated, represent the primary interpreta - tive reference for applying the arm’s length principle and have been fully integrated into domestic legisla - tion. official data available). Legislative Updates Italy has not implemented the OECD simplified and streamlined approach for baseline marketing and dis - tribution activities (Amount B) and the option remains under evaluation. By contrast, public country-by-country reporting – pursuant to EU Directive 2021/2101 – is applicable to companies with financial years starting on or after 22 June 2024, which constitutes the first reporting peri - od. Italy has opted for a largely faithful transposition of the directive, without introducing material national deviations. Scope of This Report In the absence of significant legislative or policy devel - opments in the Italian transfer pricing framework, this report focuses on selected judicial developments
that are particularly relevant for multinational groups operating in Italy. In particular, recent case law has addressed the transfer pricing treatment of interest- free intragroup financing, clarifying both the appli - cation of transfer pricing rules to interest-free loans and the allocation of the burden of proof between taxpayers and the tax authorities. The report also reviews emerging litigation concerning secondary adjustments, which remain unregulated under Italian domestic law but continue to arise in audit practice, including recent decisions that have questioned the approach adopted by tax authorities. Finally, the report highlights certain audit trends beyond case law, with particular attention to intangibles and the increasing importance of Development, Enhancement, Mainte - nance, Protection and Exploitation (DEMPE) analysis in transfer pricing examinations. Judicial Developments and Audit Trends Recent case law Intercompany financing In recent years, interest-free intragroup financing has become an increasingly debated area of Italian transfer pricing practice. In the absence of specific domestic guidance on financial transactions, Ital - ian multinational enterprises (MNEs) and authorities rely on 2021 Chapter X of the OECD TP Guidelines – however, audit practice shows that such principles are not always applied in a consistent and predictable manner. Tax audits and litigation have progressively focused on the arm’s length treatment of intragroup loans. Recent Supreme Court decisions have clarified key aspects of the allocation of the burden of proof and the relevance of group-level commercial reasons. In some cases, the Supreme Court has excluded the application of transfer pricing rules when no taxable income or undue tax savings have arisen. Together, these developments are shaping an emerging body of case law on intragroup financing in Italy. The most recent Supreme Court decisions dealing with intragroup interest-free loans were published in 2024 and 2025. In a decision favourable to the taxpayer, Judgment No 7361 of 6 February 2024 deals with an Italian parent company which had granted interest-free financing to foreign related parties. The Italian Revenue Agency
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