ITALY Trends and Developments Contributed by: Giuliano Foglia, Foglia & Partners
The answer to the new investments ruling request must be provided within 120 days, with the possibil - ity to extend the term by a further 90 days in case of a request for additional information and documentation. The ruling binds both the Italian Tax Authorities and the specific taxpayers(s) with respect to the specific business plan described in the ruling request, pro - vided the relevant laws, facts and circumstances rep - resented remain as stated. Taxpayers who invest in accordance with a new invest - ment ruling have facilitated access, regardless of their turnover, to the cooperative compliance regime. Other instruments Companies with “international activity” may access the international ruling procedure referred to in Article 31-ter of Presidential Decree No 600/73 in order to enter into an advance agreement with the tax author - ity concerning the determination of transfer pricing, the transfer of residence, the attribution of profits or losses to a permanent establishment, or the payment of dividends, interest, and royalties. In particular, the eligible enterprises are those engaged in “international activity,” namely companies resident in the territory of the State which, alternatively or jointly: • are, with respect to non-resident companies, in one or more of the conditions that trigger the applica - tion of transfer pricing rules; • have assets, funds, or capital held by non-resident entities, or hold an interest in the assets, funds, or capital of non-resident entities; • have paid to, or received from, non-resident enti - ties dividends, interest, royalties, or other income components; and • carry out their activity through a permanent estab - lishment in another State. The scope of advance agreements may cover: • the prior definition, also through mutual agreement with the Tax Authority, of the methods for deter - mining the arm’s length value of transfer prices (ie, unilateral and bilateral (or multilateral) APAs);
• the prior definition, through mutual agreement, of exit or entry values in the case of a transfer of tax residence abroad or into Italy; • the application, to a specific case, of rules, includ - ing those of treaty origin, concerning the attribu - tion of profits and losses to the foreign permanent establishment of a resident enterprise or entity, or to the permanent establishment in Italy of a non- resident entity; • the application, to a specific case, of rules, includ - ing those of treaty origin, concerning the payment or receipt of dividends, interest, royalties, and other incomes to or from non-resident entities; and • the prior assessment of whether the requirements for the existence of a permanent establishment in the territory of the State are met. Cooperative compliance programme Since 2015, Italy has implemented a cooperative compliance regime, in line with the OECD standards, allowing groups and companies, with turnover/reve - nues of at least EUR500 million (EUR100 million from 2028), to establish an ongoing dialogue with the com - petent offices of the Italian Revenue Agency, aimed at providing taxpayers with facilitated instruments to obtain certainty on possible issues related to the inter - pretation and application of tax provisions as well as eligibility for specific tax regimes. The most relevant facilitations consist of: • reduced term for obtaining an advance answer from the Italian Revenue Agency to ruling requests (45 days, instead of the ordinary 90 days); and • under certain conditions, no/reduced penalties in case of challenges by the Italian Revenue Agency; • under certain conditions, no criminal liability for the offence of incorrect tax return; and • reduced statute of limitation for tax audits (three years, instead of the ordinary five years). Taxpayers adhering to the cooperative compliance regime must have an effective integrated system for identifying, measuring, managing and controlling tax risks, including those arising from the application of accounting principles (so-called “Tax Control Frame - work” or “TCF”).
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