About Us
FAQ
Global Law Experts Logo
Global Law Experts Logo

Find a Global Law Expert

Specialism
Country
Practice Area

Awards

Since 2010, the Global Law Experts annual awards have been celebrating excellence, innovation and performance across the legal communities from around the world.

With Judgement 2853, the Tax Division of the Italian Supreme Court Ruled on Transfer Pricing by Applying the OECD Method “TNMM”

posted 4 weeks ago

The Italian Revenue Agency (“Agenzia delle Entrate”) – for the purposes of identifying the normal value of intra-group transactions – relating to relations with the English company “G. UK” has disregarded the applicability of the “TNMM” method, used by the taxpayer for the years 2009 and 2010. It is also a prerequisite for the issuance of disputed credit notes and the related decrease in taxable income. Meanwhile, the Office considered the CUP method to be applicable – used by the Administration in surveys referred to in the same tax periods, with the consequent adjustment of a higher taxable income, compared to that declared.

The same Agency, on the other hand, with reference to the intra-group relationships with the same company, placed in the tax years 2007 and 2008 and subject to undisputed control in the same audit, had not denied the applicability of the TNMM method, as used by the taxpayer, which in such cases had led to the issuance of debit notes with a relative increase in the declared income.

Thus, according to the taxpayer, the denial of the applicability of the TNMM method (only) for the tax periods assessed, which is already unlawful in itself, combined with the simultaneous confirmation of the use of the same method for the previous two tax years, would have also led to the violation of the principle of continuity of tax values, regardless of the tax convenience on the part of the Office.

The Courts of First Instance and Appeal rejected the appeals proposed by the company, deeming it precluded the applicability of a method different from that applied by the Tax Authorities at the time of rectification.

The company then appealed to the Supreme Court (“Corte di Cassazione”) against the appeal ruling.

The Supreme Court held that as a consequence of this express and erroneous underestimation of the relevance of the method applied, the appellate court did not conduct the necessary factual checks with regard to the data that emerged from the audit and those offered by the taxpayer to fulfill the relevant burden of proof – in the same way as the principles and criteria indicated, about the usability or not, and about the outcome of any use of the TNMM method.

With regard to transfer pricing, the method developed by the OECD and called TNMM can be used, provided that: a) the survey period is selected, b) comparable companies are identified, c) appropriate accounting adjustments are made to the financial statements of the tested party, d) due account is taken of differences between the tested party and comparable companies in terms of risks assumed or functions performed, and e) a reliable profit level indicator is taken.

Author

Find the right Legal Expert for your business

The premier guide to leading legal professionals throughout the world

Specialism
Country
Practice Area
0
LAWYERS RECOGNIZED
0 m+
EVALUATIONS OF LAWYERS BY THEIR PEERS
0
PRACTICE AREAS
0
COUNTRIES AROUND THE WORLD

Join

0
who are already getting the benefits

Sign up for the latest legal briefings and news within Global Law Experts’ community, as well as a whole host of features, editorial and conference updates direct to your email inbox.

Naturally you can unsubscribe at any time.

Newsletter Sign Up

About Us

Global Law Experts is dedicated to providing exceptional legal services to clients around the world. With a vast network of highly skilled and experienced lawyers, we are committed to delivering innovative and tailored solutions to meet the diverse needs of our clients in various jurisdictions.

Quick Links

Help

Contact Us

Stay Informed

Join Mailing List

GLE