Ministry of Finance Decree Implementing Transfer Pricing Guidelines: A Preliminary Survey

Abstract

Italy has always abided by OECD Recommendations on Transfer Price; the Italian Tax office and Tax police have always been enthusiast actors in this respect. Ever since the first domestic regulations in this field, dating back to the first half of the eighties, statutory provisions have always been scarce and limited. With a certain margin of appreciation, it could be argued that the bulk of the TP discipline was limited to a few commas in an article of the Income Tax Act (currently, article 110, §§ 7 and sub). The ways and means to be used during the assessment, the appropriate methodology to be followed, the technicalities of the discipline were left for years to Circular letters of the Tax office, practitioners guidelines, and academic writings. Judicial decisions in these decades played an important role in molding and shaping slowly but relentlessly the Italian way to Transfer price as well. Lights and shadows both never missed. The current Decree codifies the domestic best practices and acknowledge the remarkable step forwards by the International Community and the OECD. Rather than introducing groundbreaking news, it clarifies and makes accessible principles and approaches that were, in a way, already practiced by the Tax Courts. It could be considered, in this respect, a kind of ‘Restatement’ rather than an innovative provision.