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Italy: First round of CbCR implementation takes place


The implementation of country-by-country reporting (CbCR) in Italian Law showed for the first time its practical consequences on October 31 2017. The new format of the tax return for the fiscal year 2016 contains a new section (row RS268) dedicated to the communication to the Central Revenue of the basic information to comply with CbCR.

Domestic law provisions in brief

The Budget Law for 2016 (Law No. 208 dated December 28 2015, published in the Official Journal No. 302 dated December 30 2015) introduced, as of January 1 2016, in the Italian framework the CbC report. Considering that the first implementation of the provisions would have occurred in the second half of 2017 in the context of the electronic filing of the 2016 tax return, the Ministry of Finance provided practical guidance and specific clarifications via a Decree of February 23 2017.

Specifically, the decree states that the parent companies of multinational groups, resident in Italy for tax purposes, with a consolidated turnover equal or in excess of €750 million ($885 million) are obliged to prepare and file their CbC reports to the Italian tax authorities. Under the Decree, the first fiscal year covered is the one beginning on or after January 1 2016 and the CbC report must be filed within 12 months from the end of the reference year.

In addition, it is important to stress that CbCR provisions do not affect only Italian ultimate parent companies, but also local entities belonging to multinational groups. In fact, the burden of filing the report shall fall down on the Italian subsidiary (or permanent establishment) in case the following circumstances are met:

  • The entity is resident for tax purposes in Italy; and

  • One of the following conditions apply:

i) the parent entity of the MNE group is not obligated to file a CbC report in its jurisdiction of tax residence; or

ii) the jurisdiction – in which the parent entity is resident for tax purposes – does not have an agreement in place with the Italian Tax Administration for an automatic exchange of the CbCR; or

iii) there has been a systemic failure of the jurisdiction of tax residence of the ultimate parent entity in the transmission to the Italian Central Revenue of the CbC report.

Practical impacts on business operators

In light of all the above, companies whose fiscal year ends on December 31 2016 are the first ones to manage the practical aspects of this initial implementation of the CbCR regime in Italy. In fact, they were requested to meet the deadline of September 30 2017 (then postponed to October 31) for the electronic filing of the 2016 tax return where a specific section is dedicated to the CbC report and in particular it is meant to disclose which is the group entity in principle required to make the filing and which is the one practically bearing the burden.

Therefore, notwithstanding the size of the Italian controlled entity, the latter had to focus on the following activities in order to properly approach the tasks related to CbCR and check whether the communication burden may ultimately fall on it. Namely, the process may include the following steps:

a) Identification of the group consolidated turnover in fiscal year 2016;

b) Verification if the ultimate parent company – in principle requested to prepare and file the CbC report to its tax administration – will effectively accomplish the task (reference is to the circumstances listed in the section above);

c) In case at least one of the abovementioned circumstances is not matched, consequent election of the group entity (surrogate or designated status) in charge of the CbCR; and

d) In the event the CbCR burden falls on the Italian subsidiary, the latter is in principle requested to fill-in all information requested by the CbCR forms and file them to the Italian Central Revenue.

Accordingly, in situations like those as per point d) above, the most relevant issue faced by the local management is related to the impossibility of gathering the necessary information (economic, tax and operational wise) concerning all group entities (i.e. on a worldwide basis). In this respect, it is worth mentioning that the Italian law provides for administrative penalties ranging from €10,000 to €50,000 in case the local taxpayer does not file the CbC report or submits it with incomplete or incorrect information.

Nevertheless, the Central Revenue seems to be fully aware of those issues related to the availability at local level of the information that should be managed and organised by the headquarters. Therefore, the CbCR section of the Italian tax return provides the local entity with the possibility (by checking a dedicated box) to communicate that it was not in the position to fully complete the CbC report because of a lack of information from the group. Of course, in order to avoid any dispute in case of future tax inspections, it is advisable that the Italian controlled entity proceeds with filing the CbC report with all details concerning, at least, its own position.


Barbara Scampuddu



Gian Luca Nieddu

Barbara Scampuddu ( and Gian Luca Nieddu (


Tel: +39 02 7780711


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