ITALY Law and Practice Contributed by: Marco Valdonio and Gabriella Cappelleri, Maisto e Associati
borne for the performance of the same services. Therefore, if the simplified approach is applied, a specific benchmark to test the arm’s length value is not required. However, in order to apply such a simplified approach, the taxpayer must draft specific documentation in accordance with the detailed content set out by the 2020 TP DOC Regulation. 11.2 Rules on Savings Arising From Operating in the Jurisdiction Italian laws do not provide for specific rules gov - erning savings arising from operating in Italy; in line with the general OECD recommendations, savings arising from operating in Italy should be taken into account in the functional analysis as they are an economic characteristic of the mar - ket. 11.3 Unique Transfer Pricing Rules or Practices Italian laws provide notable unique rules appli - cable to the determination of the transfer pric - ing applicable to online advertising sales and ancillary services rendered by Italian taxpayers to related foreign parties. Specifically, Article 1(177) of Law 27 December 2013, No 147, pro - vides that in determining the pricing of online advertising sales and ancillary services, taxpay - ers must use profit indicators other than those applicable to costs incurred for carrying out the activity (essentially, the CPM and TNMM based on costs). The use of profit indicators based on costs is allowed only if an APA is reached with the IRA.12 Co-ordination With Customs Valua - tion. 11.4 Financial Transactions Italian laws do not provide any provision about financial transactions. The Ministerial Decree, dated 14 May 2018, set out general guidance for the correct application of the arm’s length princi -
ple in line with international best practices mak - ing explicit reference to the OECD Guidelines (of July 2017). It also provides, pursuant to Article 9, that any additional implementing arrangement shall be provided for by one or more Commis - sioner Decision, taking into account the provi - sions of the OECD Guidelines as regularly updat - ed. However, even if no Commissioner Decision has been issued, currently the approach is that of following the provisions included in Chapter X of 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-ordi - nation 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 customs valuation 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 con - troversy process for transfer pricing matters.
Accordingly, general rules apply. Administrative Tax Assessment
As a rule, in the case of a tax audit (which can be performed 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
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