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Italy: Italy issues advance tax treatment ruling for logistic hubs and PEs

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Barbara Scampuddu

Gian Luca Nieddu

The Italian tax authorities have issued a resolution that should help multinationals selling goods and services into Italy, or using the country for storage or distribution.

Article 2 of Law Decree No. 147/2015 allows multinational companies willing to carry out investments in Italy – for an amount of at least €30 million ($32 million) and resulting in relevant occupational implications – to submit the related investment plan to the Italian tax authorities and know the applicable tax treatment in advance. In accordance with the above, Resolution No. 4/E, dated January 17 2017, was released by the Italian revenue agency in response to a ruling request issued by a multinational group intending to enact the following three-phase investment in Italy:

  • Phase one (under completion): increase Alfa company's (Italian resident) manufacturing activities;

  • Phase two (expected by 2017-18): introduce a new production line into Alfa plant, through which Alfa will be acting as a contract manufacturer for its foreign related party Beta; and

  • Phase three (expected by 2018-19): create an Italian storage and distribution centre from where Beta shall distribute worldwide goods and merchandise coming from different group plants. This centre will be managed by a professional logistic service provider based on a specific agreement with Beta.

By means of its ruling request, the group wished to ascertain if setting up a storage and distribution centre in Italy (phase three above) may constitute a permanent establishment (PE) of Beta in Italy, as provided by Article 5 of the OECD Model Tax Convention and Article 162 of the Italian Tax Code.

The Italian revenue agency clarified that, in principle, a storage and distribution centre of Beta in Italy may be considered as a "fixed place of business" (as defined by paragraph 1, point 4, of the commentary to the OECD Model) if used by Beta to carry out – even non-exclusively – its "ordinary" business activity. However, based on the indications set forth by Article 5, paragraph 3 of the tax treaty between Italy and Beta's country of residence, no Italian PE can be identified if the facilities are used "solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise", which are in fact preparatory or auxiliary activities.

Therefore, Beta's storage and distribution centre in Italy shall not be considered as an Italian PE of the foreign company if all the below conditions are met:

1) This facility must be used exclusively to carry out activities for the storage, display or delivery of goods. No other function whatsoever, different from those "preparatory or auxiliary activities" mentioned before – including, for instance: sale orders collection, the sales of Beta's goods and others – shall be performed therein;

2) The said storage, display or delivery activities can only be related to goods belonging to Beta. Therefore, a PE would be identified if, in its Italian storage and distribution centre, Beta carried out storage, display or delivery of merchandise belonging to Alfa or other companies; and

3) Based on the above, any finished good or merchandise that Beta intends to sell in Italy must leave its storage and distribution centre before the sale is enacted.

Furthermore, the Italian revenue agency stated that, based on the information provided by the group, no Beta "personal" PE should be identified in Italy, provided that no person therein – other than independent agents – would be entitled to sign agreements on behalf of Beta or anyhow bind or represent the foreign company before third parties.

Barbara Scampuddu ( and Gian Luca Nieddu (


Tel: +39 02 7780711


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