Italy: Pending transfer pricing, international tax reform proposals

Italy: Transfer pricing, international tax reform

A draft legislative decree, currently pending consideration by the Italian parliamentary commissions, would allow companies with international operations to enter into five-year binding agreements with the Italian tax administration concerning the treatment of the following cross-border issues: (1) transfer pricing; (2) inbound and outbound transfers of corporate residence, and determination of value of transferred assets; (3) existence of a permanent establishment and attribution of profits; and (4) domestic and treaty-related taxation of cross-border payments of interest, dividends, and royalties. The proposed provisions would also apply for purposes of the Italian regional tax on productive activities (IRAP).

Related content

Expenses related to “black list” transactions

The draft legislative decree would amend the rule for deductions of expenses related to transactions with counterparties that are residents of or established in “low tax” jurisdictions—that is, “black list” jurisdictions.

Currently, such expenses are disallowed as deductions if the taxpayer cannot provide sufficient evidence of either the business substance of the counterparty to the transaction or the genuine business reason for the transaction together with proof of its actual execution. The pending draft legislative decree would allow for expenses from such transactions to be deductible if the transfer pricing is at arm’s length (otherwise, the current rules for the most part would generally apply).

 

Read an April 2015 report [PDF 228 KB] prepared by the KPMG member firm in Italy: Delegation Law for the reform of the Italian Tax System

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit

KPMG's new digital platform

KPMG International has created a state of the art digital platform that enhances your experience, optimized to discover new and related content.