A legislative decree, intended to encourage foreign investments in Italy, includes provisions that allow companies with international operations to enter into a five-year binding agreement with the Italian tax administration with respect to the following cross-border issues: (1) transfer pricing; (2) definition of values for inbound and outbound transfer or residence; (3) existence of a permanent establishment and attribution of profits; (4) domestic and tax treaty-related taxation of cross-border payments of interest, dividends, and royalties; and (5) in some circumstances, the definition of arm’s length value for the purpose of “black list” expenses and costs.
The new measures in legislative decree n. 147 (published in the official gazette on 22 September 2015) do not reflect BEPS-inspired action—that is, pursuant to the OECD’s base erosion and profit shifting (BEPS) project.
In addition to the five-year binding agreement rules, the legislative decree also provides for the following:
A “statement of practice” will be issued by the Italian revenue agency within 90 days (i.e., by 5 January 2015) setting out rules for implementation of the legislative decree and establishing the effective date for the new measures.
Read a September 2015 report [PDF 250 KB] prepared by the KPMG member firm in Italy: Implementation decree on growth and internationalization of companies
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