Offer for Assistance on Transfer Pricing Issues

In 2010, a great new opportunity has been introduced in the field of transfer pricing for taxpayers that are part of multinational groups operating in Italy.

What

In fact, preparing a specific supporting documentation, indicating the possession of such documentation within the terms and conditions prescribed by the new rules and delivering the same not later than 10 days after the request, the taxpayer could benefit from the non application of administrative penalties (in synthesis from 100% to 200% of the additional tax assessed in Italy) in case of disputes and transfer pricing adjustment [1].

How

The necessary conditions to apply for the non-application of administrative penalties are essentially three:

  1. Preparation of a specific supporting documentation (National Documentation / Masterfile), sufficient to permit the finding of compliance with the normal value of the transfer prices charged;
  2. Communication to the Financial Administration of the possession of the documentation that must be performed:
  •  for the years starting from that in force at the time the  Decree Law no. 78 was implemented (ie 31 May 2010) and subsequent (eg., 2011 and subsequent ones)
    • with the submission of the tax return for each year (eg communication UNICO 2014 for the fiscal year 2013)
    • for tax periods prior to those in force at the time the  Decree Law no. 78 was implemented (2009 and the previous ones) still ascertainable;
      • with electronic filing through the service Entratel by 28/12/2010 or later, however prior the beginning of any access, inspections, audits or other administrative investigation of which the subject has had formal knowledge;
    • 3. Delivery of such documentation no later than 10 days after the request.

Why implementing the documentation

  1. Tax audits on transfer pricing are becoming more and more recurrent;
  2. In case of verification taxpayer must still prove the reasonableness of its transfer pricing, in addition … with the additional penalty charge;
  3. The non-application of administrative penalties has been confirmed by the experience of the first three years of application of the new rules;
  4. It is a complex issue, inadequate to be discussed in a tax court.

The experience of this firs years of implementation, once overcome the initial scepticism of the first year, has confirmed the obvious advantage that the introduction of the above described rules has led to those taxpayers who have been able to develop, communicate and provide to the tax authorities an appropriate documentation. In fact, in case of these taxpayers experienced tax audits resulting in transfer pricing adjustments, the same benefited from the non application of administrative penalties.

Considering that the tax audits have become more and more frequent, for multinational companies,and that the same are now focused mainly on the assessment of transfer pricing in place, the need to prepare such documentation is now uniformly recognized by companies and their respective tax advisors having enough experience in international matters.

One of the most complex parts in the TP document implantation certainly is the economic analysis that should be included in the national documentation in order to support the transfer pricing applied. This analysis in fact requires, in addition to both a consolidated experience in the field and in international best practices, the availability of appropriate tools (databases etc).

For these reasons, considering the significant experience gained in the most prestigious multinational consulting firms by our network professionals, in the preparation of supporting transfer pricing documentation and relating economic analysis, we are able to address any problem in Transfer Pricing field: from the performance of economic analyses in support of Transfer Pricing,  the preparation of functional analysis, to a full Countryfile  and Masterfile Documentation .

To do so, please fill out the check list of the preliminary information of the functions and risks undertaken by your company in order to make us understand your specific needs and find out how we can help you.

Do not hesitate to contact us for any further information regarding our services.

[1]. This opportunity was introduced by Article 26 of Decree Law no. 78 of 31 May 2010 (converted with amendments by Law no. 122 of 30 July 2010) and was subsequently regulated by the measure of the Director of the Revenue Agency of 29 September 2010 and Circular. 58 / E of 15 December 2010 of the Revenue Agency. For further information see Sector Regulations.