This content is from: Italy

Italy: Ministry of Finance launches a public consultation on transfer pricing

On February 21 2018, the Ministry of Economy and Finance (MEF) released draft regulations for public consultation designed to provide operational guidance on transfer pricing. Following the international evolution that occurred at the OECD level, particularly with the BEPS project, a working group composed of the Finance Department, the Revenue Agency and the tax police have prepared an action plan aimed at implementing the legislation, providing clarity to taxpayers on basic principles and ensuring adequate training on the structures responsible for applying these rules.

The MEF has released three different documents inviting all interested parties (e.g. corporations, tax advisers, tax research centres, foundations, etc.) to submit observations, suggestions and any other type of input that may be useful to set a more consistent approach to transfer pricing issues by the tax administration. The three items are described below.

Scheme of the ministerial decree as regards transfer pricing practice

With particular reference to the final report on Actions 8 to 10 of the BEPS Action Plan, Article 59 of Law Decree No. 50 of 2017 (converted, with amendments, by Law No. 96 of 2017) modified Article 110, paragraph 7 of the Corporate Income Tax Code (i.e. Testo Unico delle Imposte sui Redditi), providing for the approval of a Ministerial Decree containing, on the basis of international best practices, guidelines on the practical aspects of applying the arm's-length principle to transactions within multinational enterprises.

In particular, recalling Article 9 of the OECD Model Convention and the OECD Transfer Pricing Guidelines as main sources of reference, the Ministerial Decree focuses on:

  • Scope of application (i.e. to intercompany flow only, where the related parties involved cannot both be resident in Italy);
  • Definition of associated entities, notion of control, controlled transactions;
  • Comparability factors;
  • Transfer pricing methods;
  • Aggregation of transactions; and,
  • Arm's length range of value.

It is worth noting that this first draft is quite general in the indications it provides and does not even touch on the delicate issues usually faced in the transfer pricing practice (e.g. selection of comparables, positioning within the range, and so on). Accordingly, the outcome of this public consultation is worth monitoring to verify whether the tax administration will ultimately take a certain position on some specific topics.

Scheme of the directorial decree on corresponding adjustment procedures

The public consultation also concerns the Revenue Agency Director's draft provisions regarding the implementation of the new regulatory provisions contained in Article 31-quater paragraph 1, point c) of Presidential Decree No. 600/1973 (on tax assessment). This concerns corresponding adjustments following primary adjustments made by another state as a consequence of the application of internal rules. Namely, the article under discussion provides that the recognition by an Italian company of the adjustments made by a foreign financial administration in relation to an intercompany transaction with an affiliate resident in that other jurisdiction – based on the transfer pricing legislation applicable in that foreign country – can be implemented locally (i.e. in Italy) through the presentation of a specific request to the Italian Central Revenue. The directorial decree under discussion outlines the modalities for submitting the application and introduces a 180-day term for the conclusion of the procedure.

Therefore, considering also the experiences of the last decade concerning the advance pricing agreement (APA) procedure, this public consultation offers the opportunity to highlight the most critical aspects that may be forecast in the practical application of this new mechanism and consequent viable counter-measures.

Translation into Italian of the relevant parts of the OECD transfer pricing guidelines

In the context of this public consultation, an Italian translation of a vast part of the 2017 OECD Transfer Pricing Guidelines has been released: the aim of such an effort from the MEF is to facilitate access to the guidelines to a larger number of operators.

Interested parties are invited to provide comments on the drafts presented above and also share contributions on other transfer pricing-related topics not mentioned in the review being conducted by the task force. Comments and proposals will have to be transmitted by March 21 2018 to the following e-mail address: All contributions provided may assist in providing a basis for the tax administration to issue one or more public documents that will serve as interpretations and practical guidance on complex matters such as those involved in transfer pricing.

Furthermore, in the context of this activity, a targeted training is also planned for the officers of the Revenue Agency and the tax police, both at central and local level, to ensure adequate knowledge and consistent application of transfer pricing rules.


Barbara Scampuddu ( and Gian Luca Nieddu (
Tel: +39 02 7780711

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