With the publication of Legislative Decree No. 50/2017 (the “Decree”) on 24 April 2017, Italy has introduced significant changes with regard to transfer pricing regulations and to the recently enacted Italian Patent box regime.
The Decree has enforced measures to further align the Italian regulations with the principles and recommendations of the OECD Guidelines and with the results of the BEPS works. In particular, under the new provisions the income deriving from transactions with related companies is to be determined on the basis of conditions and prices that would be agreed between independent parties operating under conditions of free competition and in comparable circumstances. Previously, the only legal reference indicated that transactions between related companies were to be valued based on the “normal value” of the goods sold or services provided, which was defined by Article 9 of the Italian Income Tax Code as the average price paid for goods or services of the same or similar type, in conditions of free market and at the same level of trade, taking into account the time and place where the goods or services were acquired (or at the closest time and nearest place).
Furthermore, the Decree introduces the opportunity for Italian taxpayers to apply for corresponding adjustments in the following cases: (a) agreements concluded with foreign state competent authorities in MAP discussions; (b) tax audits carried out in the context of international cooperation; (c) transfer pricing adjustments as a result of a tax audit carried out in a foreign country having a tax treaty in force with Italy.
The Decree updated the list of intangible assets that can qualify for the tax incentives under the Patent box regime, by excluding trademarks from the qualifying intangibles in line with BEPS Action 5 Final Report recommendations. This applies for all the applications submitted for fiscal year 2017 and afterwards.
If you have any questions on the above, please contact the Italian Quantera Global team on +39 328 1692 273 or email@example.com or your trusted Quantera Global advisor. We will be happy to assist you.