ITALY Law and Practice Contributed by: Marco Valdonio and Gabriella Cappelleri, Maisto e Associati
However, according to other recent decisions, the Supreme Court has overturned this posi - tion. Indeed, the Supreme Court has stated that, the IRA bears only the burden of proof to demonstrate the correctness and legitimacy of TP adjustments. The determination of increased items of income, as a consequence, must be fully justified by the inspectors; it will not be suf - ficient for the inspectors to merely underline in the tax audit report/notice of assessment that there is a gap between intra-group prices paid and arm’s length prices. In the absence of a spe - cific legislative provision on the burden of proof in TP disputes, the ordinary rules on the burden of proof must be observed. In practice, the IRA, based on the above-mentioned jurisprudence, is the “substantive” plaintiff, and so it bears only the burden of proof. In this sense, it should be underlined that the OECD Guidelines recom - mend that the burden of proof should not be misused by tax administrations or taxpayers as a justification for making groundless or unverifi - able assertions about transfer pricing (see, for example, Supreme Court decisions No 6656 of 6 April 2016; No 20805 of 6 September 2017; No 5645 of 2 March 2020; No 5646 of 3 March 2020; No 11837 of 18 June 2020; No 21828 of 9 October 2020; No 22695 of 19 October 2020; No 230 of 12 January 2021, No 1232 of 21 January 2021, No 2908 of 31 January 2022, No 26695 of 12 September 2022 and No 36275 of 13 Decem - ber 2022). Furthermore, it is worth mentioning a recent case decision concerning the role of OECD Guidelines in the hierarchy of sources of law. A recent Italian Supreme Court decision (see, No 26432 of 10 October 2024), dealing with a case which occurred before the revision of Article 110(7) ITC and the related Ministerial Decree dated 14 May 2018, clarified the role of
the OECD Guidelines in the Italian hierarchy of sources of law. In this decision, the Supreme Court stated that the OECD Guidelines (i) are not part of the formal hierarchy of legal sources in Italy unless specifically included by legislative provisions and (ii) just represent a technical tool to support in the interpretation of broader legal concepts, such as “arm’s length” conditions. 15. Foreign Payment Restrictions 15.1 Restrictions on Outbound Payments Relating to Uncontrolled Transactions Outbound payments (eg, royalties) relating to uncontrolled transactions are not restricted by Outbound payments (eg, royalties) relating to controlled transactions are not restricted by Ital - ian laws and/or by IRA practices. 15.3 Effects of Other Countries’ Legal Restrictions Italian laws do not have rules regarding the effects of other countries’ legal restrictions. 16. Transparency and Confidentiality 16.1 Publication of Information on APAs or Transfer Pricing Audit Outcomes With the exception of the publication of statistics in compliance with international standards, the IRA does not publish any information regarding APAs or transfer pricing audit outcomes. Italian laws and/or by IRA practices. 15.2 Restrictions on Outbound Payments Relating to Controlled Transactions
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