ITALY - Advanced agreements for international corporations

With decision n° 42295 of 21 March 2016
the Italian tax authority’s chief executive has given instructions on how to implement
provisions on ruling requests by international corporations. It replaces the
decision by the Italian tax authority’s chief executive of 23 July 2004 on
ruling requests by international corporations and will enter into force on the
day it is published on the Italian tax authority’s website. The new decision
also applies to ruling requests already submitted and still pending on the date
of its publication on the Italian tax authority’s website (i.e. 21 March 2016).According
to said decision, international corporations also include businesses
incorporated in Italy considered as such pursuant to the provisions on income
taxes 

a.    which are part of multinational groups
and/or

b.    whose assets, funds or capital shares are
held by non-resident companies or which hold assets, funds or capital shares of
non-resident companies;

c.     which have paid to or received by
non-resident companies dividends, interests, royalties or other income items;

d.    which maintain a permanent establishment
(PE) in another country.

Non-resident businesses are also
considered to be international corporations if they carry out their business in
Italy through a permanent establishment. Advance tax rulings can be requested
on the following matters:

 i.       
transfer
pricing regime;

ii.       
definition
of entry and exit values in case of business relocation;

iii.       
allocation
of profit (or loss) to the permanent establishment;

iv.       
preliminary
assessment of compliance with requirements for permanent establishments; v.
dividends, interests, royalties or other income items paid or received.

The
ruling request has to be submitted to the following authority: Ufficio Accordi preventivi e controversie
internazionali dell’Agenzia delle entrate, Direzione Centrale Accertamento,
Settore Internazionale, sezione di Roma, Via Cristoforo Colombo, 426 c/d or
sezione di Milano, Via Manin, 25. The request has
to be made on plain paper and sent by registered mail with acknowledgement of
receipt or by direct delivery to the authority.

The request
will be declared admissible within 30 days of receipt if the requests fulfils
the requirements stated in the decision for the subject matter on which a
ruling is being requested.

Following
admissibility assessment of the request, the authority summons the legal
representative or an attorney of the company in order to assess if the
information provided is complete, requests additional documents if needed and
defines joint conduct of proceedings. The proceedings may comprehend a number
of meetings and should be concluded within 180 days from receipt of the
request. However, according to the second edition of the “Bollettino sul Ruling Internazionale”
of 19 March 2013, it takes about 16 months on average for a tax ruling to be
issued.

In the course
of the proceedings, the authority may request and shall be granted access to
company or PE headquarters, in order to directly ascertain useful information.

The ruling will
be binding for both parties to the ruling (the Italian tax authority and the
taxpayer) and is applicable to the tax period during which it was issued and
for the following four tax periods. Please mind that application of advance tax
rulings on transfer pricing may be advanced to the date of request submission
and to the four tax periods following the date on which the tax ruling has been
issued. Likewise, tax rulings on transfer pricing deriving from other tax
rulings by foreign tax authorities following mutual agreement procedures under
double taxation agreements will be binding for the parties starting from previous tax periods,
provided they are not prior to the tax period in which the taxpayer’s request has
been submitted.