Principal legislation

Identify the principal transfer pricing legislation.

Italian transfer pricing (TP) rules are regulated by article 110, paragraph 7, of the Italian Income Tax Code (IITC), as recently amended by article 59, paragraph 1, of Decree Law No. 50/2017, converted in Law No. 96/2017 to implement BEPS changes.

On 14 May 2018, the Ministry of Economy and Finance (MEF) issued a Decree in which are described the guidelines for the implementation of the revised article 110, paragraph 7, of the IITC, by taking into account of the comments received by parties invited to the public consultation launched by the MEF and ended on 21 March 2018 with a meeting in Rome.

The Ministerial Decree (MD) notes a closer approach to the ‘best international practices’, according to the OECD Guidelines for Multinational Enterprises and Actions 8, 9 and 10 of the BEPS project, now also mentioned in the revised article 110, paragraph 7 of the IITC (see question 6 for more details on BEPS impact on Italian TP rules).

The Italian legal framework on TP is also framed by the Ministerial Regulation (MR) No. 108954 dated 30 May 2018 on the ‘corresponding adjustment’, which provides further operative clarifications also concerning TP documentation (already regulated by the MR No. 137654 dated 29 September 2010 - see question 12 for more details).

Enforcement agency

Which central government agency has primary responsibility for enforcing the transfer pricing rules?

The Italian Revenue Agency (IRA), functioning under the MEF, is responsible for enforcing all local tax laws, including TP matters. Furthermore, the Italian Tax Police also has the authority to perform tax inspections on TP matters.

OECD guidelines

What is the role of the OECD Transfer Pricing Guidelines?

Reference to the OECD TP Guidelines is not explicitly made in Italian law as being considered as the best international practices. However, in the past, it should be noted that the IRA issued the Circular Letters of the Ministry of Finance Nos. 32/9/2267 dated 22 September 1980 and 42/12/1587 dated 12 December 1981 to implement the conclusions reached in the 1979 OECD TP Guidelines.

In addition, since 1995 tax auditors have been instructed to follow the updated OECD TP Guidelines when applying the arm’s-length principle. Also, Circular Letter No. 58/E of 2010, by analysing the penalty protection regime of the TP documentation, makes specific and explicit reference to the OECD TP Guidelines. Furthermore, most of the sentences issued by the Italian Tax Court, as well as the Italian Supreme Court, make reference to the OECD TP Guidelines.

According to the MD dated 14 May 2018, the arm’s-length principle included in the Italian TP rules shall be interpreted solely in accordance with the OECD TP Guidelines.

Covered transactions

To what types of transactions do the transfer pricing rules apply?

The TP rules in general apply to transactions (sales of goods and assets, provision of services, loans and licence of intangible assets) between ‘related parties’ in the meaning of article 2 of the MD dated 14 May 2018. Pursuant to this provision, a person is related to the taxpayer if:

  • the enterprise residing in the territory of the state participates, directly or indirectly, in the management, control or capital of the other non-resident company or the opposite; or
  • the same person participates, directly or indirectly, in the management, control or control capital of both companies.

The MD, for the purpose of defining related parties, intends to assign a main role to the concept of ‘participation in the management, control or capital’ and, in this regard, the definition given to the latter is:

  • the participation that a person or company owns, directly or indirectly, more than 50 per cent in the capital of another company; or
  • the dominant influence that a person or company has on the commercial or financial decisions of another company.
Arm’s-length principle

Do the relevant transfer pricing rules adhere to the arm’s-length principle?

The MD signed on 14 May 2018 on TP for cross-border transactions between related parties explicitly implements the provision contained in article 59, paragraph 1, of Decree Law No. 50/2017, which established the application of the arm’s-length principle.

The Decree reviewed article 110, paragraph 7, of the IITC by repealing the previous reference to the ‘normal value’ and replacing it with the arm’s-length principle. In this way, the Italian legislation formally aligns the national TP rules with the OECD standards, which were already applied by the IRA.

Base erosion and profit shifting

How has the OECD’s project on base erosion and profit shifting (BEPS) affected the applicable transfer pricing rules?

As part of the implementation of the OECD BEPS Project, the MEF and the IRA have issued, on 14 and 30 May 2018, respectively, two important measures on TP, following the public consultation launched on 21 February 2018.

The national guidelines, contained in the MD dated 14 May 2018, clearly reiterate the arm’s-length approach, fully compliant with that of the OECD, and provide relevant indications, inter alia, on the following aspects:

  • the existence of limits to the possibility for the IRA to ignore the TP methodologies adopted by multinational companies and to carry out alternative analysis based on different criteria or methods. The IRA must now prove and justify the reason for why the TP method adopted by an Italian taxpayer is wrong or is not the most appropriate before making the assessment based on a new one;
  • reference to the need to make appropriate use of statistical tools, including the possibility for tax inspectors to propose TP assessments making reference to an arm’s-length range and not necessarily to a specific value, usually corresponding to the median; the
  • the faculty (equally important, in terms of reducing compliance burdens and greater legal certainty) to adopt a simplified approach (also at a documental level) in relation to low added value intercompany services; in fact, multinational companies will be able to determine the appropriate value at arm’s length of these intercompany services through the application of a 5 per cent mark-up on direct and indirect costs sustained.

Finally, the Regulation issued on 30 May 2018 contains guidelines for the procedure to be followed to obtain the corresponding adjustments in favour of Italian taxpayers after a TP adjustment is undertaken by a foreign tax administration (see also question 35) to the taxable income of the related company resident in the other state.

Any amendment to the OECD TP Guidelines is automatically adopted in Italy in the case of intercompany transactions between countries for which a double taxation treaty exists.

Pricing methods

Accepted methods

What transfer pricing methods are acceptable? What are the pros and cons of each method?

Generally, the IRA accepts all the OECD TP methods and a taxpayer can choose between the appropriate methods, depending on the specific characteristics of the transaction under analysis. However, the MD dated 14 May 2018 introduced a specific hierarchy among the OECD methods (see question 9).

For tangible properties transactions any method provided at OECD level can be used. For intangible properties transactions the methods used are comparable uncontrolled price (CUP) and profit split. For services the methods used are CUP and cost-plus, as is also the case for loans. In all cases the choice of the best method must take into consideration all the circumstances pertaining to the transaction and the best one chosen to test the arm’s-length principle.


Are cost-sharing arrangements permitted? Describe the acceptable cost-sharing pricing methods.

Cost-sharing arrangements are generally permitted. In this regard, Circular Letter No. 9/2267 provides that various allocation keys should be taken into account to split costs to the beneficiary entities (for instance: turnover and number of employees). The cost must now be recharged with a mark-up that, with low value-added services, can be considered to be 5 per cent (see also question 6). The IRA follows the OECD Guidelines and the EU Code of Conduct on this matter.

Best method

What are the rules for selecting a transfer pricing method?

Generally, the appropriate TP method should be selected on a case-by-case basis. However, the MD dated 14 May 2018 introduced a specific hierarchy among the OECD methods.

In particular, if both traditional and transactional methods can be applied with equal reliability, the IRA expressed a preference for traditional transaction methods, which are considered more direct. If traditional transaction methods can be applied with equal reliability, the CUP method is preferred.

Taxpayer-initiated adjustments

Can a taxpayer make transfer pricing adjustments?

At present, there is no specific provision under the IITC on TP adjustments at year-end. Nevertheless, year-end (or if possible also during the year) adjustments are generally admitted and widely used by multinational groups with reference to their intercompany transactions and, if in line with the arm’s-length principle, they are also accepted by the IRA.

Safe harbours

Are special ‘safe harbour’ methods available for certain types of related-party transactions? What are these methods and what types of transactions do they apply to?

Generally, safe harbour methods are not admissible. The MD dated 14 May 2018 adopted the OECD faculty to adopt a simplified approach (also at a documental level) in relation to low added-value intercompany services.

Disclosures and documentation


Does the tax authority require taxpayers to submit transfer pricing documentation? Regardless of whether transfer pricing documentation is required, does preparing documentation confer any other benefits?

Through article 26 of Decree Law No. 78 and dated 31 May 2010, the Italian legislature implemented a domestic rule on TP documentation, according to the OECD TP Guidelines. The relevant TP documentation is not mandatory. For this reason, a lack of preparation or submission of TP documentation to the Tax Office does not constitute a violation of the tax rules.

The taxpayer can also submit TP documentation not valid for penalty protection, but in line with the EU Code of Conduct on TP documentation or OECD Guidelines. In such cases, no penalty protection is given by the IRA. If the taxpayer does not submit any TP policy or documentation to the tax inspectors, they are free to select the most appropriate TP method and remuneration criteria.

Italian taxpayers may prepare documentation to permit the IRA to verify the fairness of the TP methods adopted and compliance with the arm’s-length principle. If the TP documentation is prepared following the content indicated in Regulation No. 2010/137654, the taxpayer is allowed protection from administrative penalties.

Country-by-country reporting

Has the tax authority proposed or adopted country-by-country reporting? What are the differences between the local country-by-country reporting rules and the consensus framework of Chapter 5 of the OECD Transfer Pricing Guidelines?

On 30 December 2015, Law No. 208/2015 introduced country-by country (CbC) reporting requirements for Italian-based multinational groups with consolidated revenues higher than €750 million.

On 23 February 2017, the IRA issued Ministerial Decree No. 23 for the implementation of CbC reporting rules in Italy. Subsequently, two regulations were published on 28 November (No. 275956) and on 11 December 2017 (No. 288555), providing additional guidance for CbC reporting in Italy, fully in line with the recommendations included in Action 13 (BEPS) as well as with the content of Directive 2016/881/EU.

CbC reporting applies in Italy for tax periods started on or after 1 January 2016. However, the IRA postponed the deadline for the submission of the first CbC report from 31 December 2017 to 9 February 2018, owing to the delayed publication of the clarifications.

In case of failure to file a CbC report or disclosure of incomplete or inaccurate information, penalties ranging from €10,000 up to €50,000 are applicable.

Furthermore, as clarified in MD No. 23, a CbC report may be used by the IRA for TP or other BEPS-related risks analysis, but on its own it is not sufficient as a basis for TP adjustments.

Timing of documentation

When must a taxpayer prepare and submit transfer pricing documentation?

To benefit from the penalties protection, taxpayers must flag a special box included in the annual income tax return. In such a case, in the event of a tax assessment and of a request of TP documentation made by tax inspectors, the taxpayer must provide it within 10 days of the request. If the taxpayer does not provide the tax inspectors with the aforementioned documentation within this deadline, the penalty protection will not be applicable any longer. Other TP documentation not valid for penalty protection can be provided over a longer period of time.

Failure to document

What are the consequences for failing to submit documentation?

A lack of preparation or submission of TP documentation to the Tax Office does not constitute a violation of the tax rules. See question 12.

Adjustments and settlement

Limitation period for authority review

How long does the tax authority have to review an income tax return?

For tax periods before 2015 inclusive (income tax return filed in 2016), the final tax report, summarising the assessment of a tax period, had to be sent within the fourth year after which the income tax return of that tax period was filed or within the fifth year if the income tax return was omitted.

As amended by Law No. 208/2015, starting from tax period 2016, the final tax report must be notified by 31 December of the fifth year following the year in which the income tax return is filed. An additional 24 months are granted in case of the omission of an income tax return.

In criminal cases, and only if the IRA has communicated them to the competent Public Prosecutor, the IRA can double the period available for assessment (ie, from five to 10 years).

Rules and standards

What rules, standards or procedures govern the tax authorities’ review of companies’ compliance with transfer pricing rules? Does the tax authority or the taxpayer have the burden of proof?

The Italian tax authorities conduct their activity on the basis of guidelines provided by Circular No. 1/2018 issued by the Italian Tax Police (Guardia di Finanza). The review of companies’ compliance starts with those that have declared that they have prepared TP documentation valid for penalty protection in their annual income tax return. Further directions on how the review should be developed are contained in other internal administrative documents that are only available to the IRA.

Article 2697 of the Italian Civil Law foresees that ‘anyone intending to exert one’s rights before the Courts is required to substantiate the facts that constitute the basis thereof proven. Any party raising any objection as to the ineffectiveness of the said facts, or rather, objecting in view of fact that a right has been modified or extinguished, must prove the facts on which such objection is based’. By submitting the TP documentation, the taxpayer provides the information required to prove that the intercompany prices applied respect the arm’s-length principle. Making the TP documentation available is considered the fulfilment of the burden of proof by the taxpayer at a preventive level, which allows the taxpayer to enjoy penalty protection. During the tax audit, the tax authorities will have to prove that the transactions described in the TP documentation mentioned before are not in compliance with the arm’s-length principle.

Disputing adjustments

If the tax authority asserts a transfer pricing adjustment, what options does the taxpayer have to dispute the adjustment?

Taxpayers have at their disposal several choices:

  • agreement on the final report: this means accepting all tax issues raised by the IRA in the final tax assessment and paying the higher amount of corporate income tax and the penalties (one-third of the minimum) if penalty protection does not apply;
  • gentleman’s agreement: the taxpayer can contact (or receive a call from) the local tax office to try for a gentleman’s agreement before or after the notice of the final tax assessment but before the following 60 days;
  • appeal to the Italian Tax Court (tax litigation): the taxpayer can prepare a claim to be filed at the local tax office and the Italian local tax court’s first level within 60 days of the notice of the final tax assessment. If the lawsuit is dismissed by the local tax court, the taxpayer can appeal to the regional tax court. If this lawsuit is also dismissed by the regional tax court, the taxpayer can appeal to the Supreme Court but only for procedural inaccuracies;
  • the possibility of starting the EU arbitration convention procedure; and
  • the possibility of initiating a mutual agreement procedure (MAP) based on the bilateral treaty.

Relief from double taxation

Tax-treaty network

Does the country have a comprehensive income tax treaty network? Do these treaties have effective mutual agreement procedures?

Italy has an extensive double tax treaty (DTT) network, covering most of its foreign trade partners. In general, Italy’s taxation treaties include effective mutual agreement procedures provisions. The Italian Competent Tax Authorities (CTAs) are now working hard to conclude the existent EU arbitration and MAP procedures.

Requesting relief

How can a taxpayer request relief from double taxation under the mutual agreement procedure of a tax treaty? Are there published procedures?

A MAP can be started based on a DTT in force between Italy and a treaty partner, whose essential feature is that the CTA involved shall endeavour to eliminate, by mutual agreement, taxation not in accordance with the specific DTT.

A MAP can also be initiated pursuant to the European Arbitration Convention 90/436/EEC on the elimination of double taxation in connection with the adjustment of EU profits of associated enterprises. In such a case, the scope is limited to TP cases and also to the attribution of profits to a permanent establishment.

From an operational standpoint, the IRA issued Circular Letter No. 21/E dated 5 June 2012 to clarify the main features of a MAP and to provide instructions for activating such a procedure by distinguishing one regulated by the tax treaties based on article 25 of the OECD Model Tax Convention from others regulated at European level by the Arbitration Convention.

When relief is available

When may a taxpayer request assistance from the competent authority?

As specified in Circular Letter No. 21/E, if a person considers that the actions of one or both of the contracting states’ tax administrations result or will result in taxation not in compliance with the provisions of the tax treaty in force, he or she is entitled to submit the case to the CTA of his or her state of residence or, in the event that paragraph 1 of article 24 (Non-discrimination) of the OECD Model would apply, to the CTA of the state of which he or she is tax-resident.

The term ‘person’ includes individuals, legal entities, enterprises and any other association or entity liable to tax and resident for tax purposes in the jurisdiction of either contracting state.

Moreover, to start a MAP procedure it is sufficient to prove that the actions of one or both of the contracting states are likely to result in double taxation.

Limits on relief

Are there limitations on the type of relief that the competent authority will seek, both generally and in specific cases?

With respect to the subject matter, it has been clarified that a MAP procedure covers all cases of juridical and economical double taxation suitable to affect both individuals, enterprises and other entities to which the treaty applies.

As regards taxpayers other than individuals, these cases generally involve an improper application of withholding tax on dividends, interest and royalties, the existence of a permanent establishment, the proper allocation of profits to associated enterprises that are part of a multinational group, and the qualification of income either as business profits or as a different income category provided in the DTT.

Success rate

How effective is the competent authority in obtaining relief from double taxation?

From 1 January 2017, the Italian CTA that carries out MAP cases concerning specific taxpayers under the European Arbitration Convention or DTT is the Central Department for Large Taxpayers - Taxation and Compliance Sector for New Investment Attraction - Office of Preventive Agreements and International Disputes.

Over the past 18 months, the Italian CTA has positively concluded several MAPs with extra-EU CTAs (such as the United States, Japan and Switzerland), as well as EU Arbitration Convention procedures with many EU countries (such as Germany, France, the UK and Sweden).

Advance pricing agreements


Does the country have an advance pricing agreement (APA) programme? If so, is the programme widely used? Are unilateral, bilateral and multilateral APAs available?

Legislative Decree No. 147 of 2015, dated 22 September 2015, repealed the previous Italian rules on Ruling (unilateral APA), introduced in 2003, and replaced it by introducing new article 31-ter of Presidential Decree No. 600/1973 regulating in a more consistent way the (unilateral, bilateral and multilateral) APA procedures.

On 21 March 2016, the IRA issued a regulation providing for the instructions useful for the implementation of the above-mentioned new rules.

Based on the last official data made available by the OECD, in 2017 the IRA started 148 new instances and closed 48 agreements.


Describe the process for obtaining an APA, including a brief description of the submission requirements and any applicable user fees.

No user fee is required to open a unilateral or bilateral APA procedure.

The application for an APA must be sent by hand or by registered mail with a return receipt.

Before filing an APA request, taxpayers can ask for a pre-filing meeting or any further information concerning the procedure.

The Italian CTA evaluates the existence of the eligibility requirements within 30 days from the receipt of the application. In the affirmative case, the Office schedules a meeting with the taxpayer in order to define an action plan for the procedure, and can eventually request additional information.

Conversely, if any of the essential requirements is not met, even after discussion with the taxpayer, the Italian CTA declares the inadmissibility of the application. The procedure is structured in several meetings with the taxpayer, during which any further documentation can be required. Over the course of the procedure, the CTA and taxpayer may agree that the tax officers dealing with the procedure may visit the company premises to obtain direct knowledge of the circumstances represented in the application.

Time frame

How long does it typically take to obtain a unilateral and a bilateral APA?

In accordance with the Regulation, the procedure must be completed within 180 days of the date the application being filed. Nevertheless, as this is merely a formal term, depending on the circumstances the parties may agree to extend the procedure. In practice, the complexity of the procedure involves averaged procedure times (based on official data available in 2013, the average duration of the procedure was about 16 months) in line with comparable procedures available in most of the OECD member jurisdictions. In our experience, the completeness of the documentation prepared by the taxpayer makes the difference.


How many years can an APA cover prospectively? Are rollbacks available?

The unilateral APA remains in force for five years starting from the fiscal year in which it is signed, provided that the circumstances - specifically, the critical assumptions - under which the agreement was signed remain unchanged. The rollback is permitted up to the tax period in which the application filing took place.

In the case of bilateral or multilateral APAs, the validity period can start from the date of the application filing, consistent with the mutual agreement concluded with the treaty partners) under article 25 of the Model Tax Convention.


What types of related-party transactions or issues can be covered by APAs?

The Internationalisation Decree revised and expanded the scope of the APA procedure; the previous International Ruling was already available to reach agreements with the tax authorities on the following:

  • TP issues;
  • cross-border flow transactions (dividends, interest and royalties as well as other income);
  • attribution of profits to domestic and foreign permanent establishments (PEs); and
  • the existence of PEs.

Under the revised version, the scope has also been extended to the following:

  • agreements on asset values in the case of inbound and outbound migrations; and
  • agreements on the fair-market tax value of costs incurred with blacklist entities (only for companies participating in the Cooperative Compliance Programme).

Is the APA programme independent from the tax authority’s examination function? Is it independent from the competent authority staff that handle other double tax cases?

Through the validity of the agreement, tax inspectors may perform tax assessments only on matters different from those included in the APA.

Only the CTA Office that has concluded the APA procedure is entitled to verify that the terms and the conditions included in the agreement are unchanged as well as verifying any change in the factual and legal circumstances.

Advantages and disadvantages

What are the key advantages and disadvantages to obtaining an APA with the tax authority?

The key advantage is to have prior certainty at Italian or bilateral level on how to manage the tax matters agreed through an APA procedure.

On the other hand, this means a total disclosure of the business characteristics and group strategies to the Italian CTA.

Special topics


Is the tax authority generally required to respect the form of related-party transactions as actually structured? In what circumstances can the tax authority disregard or recharacterise related-party transactions?

As provided in Chapter IX of the OECD TP Guidelines, the IRA must verify whether contractual terms differ from the actual behaviour of the selected parties. In case of important inconsistencies, the IRA can requalify the transaction and chose the most appropriate method to test the respect of the arm’s-length principle. Otherwise, as specified by paragraph 6 of article 4 of the MD dated 14 May 2018, the IRA shall accept the actual structure and verify the appropriateness of the TP method as well as the remuneration criteria adopted. If the IRA disagrees with the TP method or the remuneration criteria, it shall have to prove and explain the reasons based on which, in their opinion, the TP method adopted is not the most appropriate and the arm’s-length principle is not satisfied, and justify the selection of new ones.

Selecting comparables

What are some of the important factors that the tax authority takes into account in selecting and evaluating comparables? In particular, does the tax authority require the use of country-specific comparable companies, or are comparables from several jurisdictions acceptable?

Generally, the IRA follows the OECD Guidelines and also accepts as comparable companies of the tested party those operating in a geographical area with similar market conditions (for example, for Italian companies they first look at local comparables, but may also accept European comparable companies).

Secret comparables

What is the tax authority’s position and practice with respect to secret comparables? If secret comparables are ever used, what procedures are in place to allow a taxpayer to defend its own transfer pricing position against the tax authority’s position based on secret comparables?

Generally, secret comparables are not used or accepted.

Secondary adjustments

Are secondary transfer pricing adjustments required? What form do they take and what are their tax consequences? Are procedures available to obtain relief from the adverse tax consequences of certain secondary adjustments?

No secondary adjustments have been required so far.

Non-deductible intercompany payments

Are any categories of intercompany payments non-deductible?

According to Italian tax law, there is no tax rule refusing the deductibility of a cost simply because it is paid to a group company.


What legislative and regulatory initiatives (besides transfer pricing rules) has the government taken to combat tax avoidance with respect to related-party transactions? What are the penalties or other consequences for non-compliance with these anti-avoidance provisions?

On 28 December 2018, the Italian Government published Legislative Decree No. 142 transposing EU Directive No. 1164/2016, also known as the EU ATAD, as amended by EU Directive No. 952/2017 (ATAD 2). The new rules entered into force as of 1 January 2019, with the exception of the hybrid mismatch rules, which should apply from 1 January 2020 and with specific reference to reverse hybrids from 1 January 2022.

Nevertheless, in article 10-bis of Law No. 212/2000, introduced by Legislative Decree No. 128/2015, Italian legislation was already in line with international standards. Accordingly, an abuse of law exists whenever one or more transactions lack any economic substance and, despite being formally in compliance with tax laws, are essentially aimed at obtaining undue tax advantages. The tax authorities must then disregard any tax advantages from these abusive schemes and calculate taxes based on the relevant circumvented rules and principles, taking into account any payments made by the taxpayer in connection with the abusive transactions.

The administrative penalties for non-compliance with tax law in Italy are the ordinary administrative tax penalties (ie, the penalties contemplated for filing incorrect tax returns or for failing to make the required tax payments), which are specified in Legislative Decree No. 471/1997 (ie, 100 per cent of the unpaid income tax). Criminal sanctions are not applicable for tax violations arising from abusive or avoidance conduct (abuso del diritto), according to Legislative Decree No. 128/2015.

Location savings

How are location savings and other location-specific attributes treated under the applicable transfer pricing rules? How are they treated by the tax authority in practice?

For the time being, the IRA has not yet taken these aspects into consideration.

Branches and permanent establishments

How are profits attributed to a branch or permanent establishment (PE)? Does the tax authority treat the branch or PE as a functionally separate enterprise and apply arm’s-length principles? If not, what other approach is applied?

After the amendments recently made by the Internationalisation Decree (Legislative Decree No. 147/2015), the Italian tax rules for profit attribution to PEs have been explicitly aligned with the Authorised OECD Approach (ie, separate entity approach) set out in the OECD 2010 Report on attribution of profits to permanent establishments. The separate entity approach is now, therefore, explicitly incorporated in article 152 of IITC.

Article 152 of the IITC currently explicitly requests also that the ‘internal dealings’ between a PE and its head office must satisfy the arm’s-length principle. Article 152 becomes applicable to intercompany transactions made with related companies that are tax-resident in states with which a DTT with Italy does not exist.

Exit charges

Are any exit charges imposed on restructurings? How are they determined?

Italian tax law does not provide specific rules for business restructurings; reference is made to Chapter IX of the OECD TP Guidelines.

Temporary exemptions and reductions

Are temporary special tax exemptions or rate reductions provided through government bodies such as local industrial development boards?

Italian tax law does not provide for such temporary special tax exemptions or rate reductions.

Update and trends

Tax authority focus and BEPS

What are the current issues of note and trends relating to transfer pricing in your country? Are there particular areas on which the taxing authority is focused? Have there been any notable legislative, administrative, enforcement or judicial developments? In particular, how is the OECD’s project on base erosion and profit shifting affecting both policymakers and tax administrators?

Tax authority focus and BEPS41 What are the current issues of note and trends relating to transfer pricing in your country? How is the OECD’s project on base erosion and profit shifting affecting both policymakers and tax administrators?

In the near future, it is expected that the number of APAs and BAPAs will increase considerably, as the Tax Administration is working hard on more efficient measures to solve double taxation. Given that the implementation of the BEPS project in Italy is advanced, expectations for further legislative or political important changes are low.