ITALY Law and Practice Contributed by: Marco Valdonio and Gabriella Cappelleri, Maisto e Associati
• prepared on a yearly basis, following the structure indicated in the 2020 TP DOC Regulation; • drafted in Italian (however, it is permissible to have the master file in English); • signed by the taxpayer’s legal representative or by a delegate using a digital signature with time stamp to be affixed within the date of the submission of the tax return; and • submitted in an electronic format and deliv - ered within 20 days from the Tax Auditors’ request. As stated above, the existence of the transfer pricing documentation must be communicated to the IRA in the corporate tax return. Circular No 15/2021 clarified that, in the event the taxpayer opts to submit the transfer pricing documentation only for a part of the intercom - pany transactions carried out, the above pen - alty protection will apply only with respect to the transactions described. Country-by-Country Reporting With Law 28 December 2015, No 208 (Finance Act 2016), Italy introduced country-by-country reporting (CbCR) obligations in accordance with Action 13 of the OECD BEPS project. On 8 March 2017, the Decree of the Italian Ministry of Finance implementing the CbCR obligations (the “CbCR Decree” ) was published. The law introduced a CbCR obligation for MNE groups to deliver a comprehensive report to the IRA reflect - ing their activities and taxes paid in each country where the group operates (eg, revenues, profits before tax and corporate income tax paid). Under the CbCR Decree, CbCR obligations may only apply to Italian-resident companies that belong to an MNE group whose consolidated revenues are not lower than EUR750 million (or
a corresponding amount in the local foreign cur - rency). An MNE group means a plurality (group) of enterprises, resident in different jurisdictions (or having permanent establishments in differ - ent jurisdictions), that are linked by a control or ownership relationship and are obliged to draft consolidated financial statements according to domestic accounting principles (or that would be obliged 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 state - ments according 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 resi - dence; or (b) there is no qualifying automatic exchange of information (AEoI) agreement for CbCR purposes between Italy and the state of residence of the non-resident parent com - pany; or (c) the IRA has notified the Italian resident Subsidiary that the state of residence of the Parent suspended the AEoI or repeat - edly omitted to transmit the CbCR files to the IRA. Even if there is no qualifying AEoI agreement, an Italian Subsidiary is, in any case, exempted from filing the CbCR in the following circumstances:
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