Italian TP Documentation

Transcription

1 TP DOCUMENTATION 64

2 Italian TP Dcumentatin TP Dcumentatin cnsists f a: Master File that cntains general infrmatin regarding the MNE grup; Cuntry File that cntains specific infrmatin regarding the single lcal enterprise and the applicatin f the relevant transfer prices. The Master File and the Cuntry File must be prepared in Italian Only sub-hlding cmpanies, if they submit a master file regarding the entire grup, may prepare their dcumentatin in English. Generally the TP dcumentatin has t be prepared n an annual basis (nly SME are free t update the ecnmic analyses included in dcumentatin every three years, if n significant mdificatins have ccurred in the relevant scenari) 65

3 Italian TP Dcumentatin The TP Dcumentatin is nt cmpulsry under Italian law Hwever, if the taxpayer adheres prperly t the transfer pricing dcumentatin requirements, it may benefit frm penalty prtectin (i.e. penalties nt applied, shuld the relevant tax audit result in a tax adjustments f transfer prices); In rder t benefit frm penalty prtectin, the taxpayer must cmmunicate t hld the TP dcumentatin upn filing the tax return fr the relevant year. Italian Revenue Agency may request during a tax inspectin t the taxpayer t disclse the dcumentatin. 66

4 Cuntry-by-Cuntry Reprting Italy intrduced a cuntry-by-cuntry reprting (CbCr) bligatin in its 2016 budget law in accrdance with actin pint 13 f the OECD BEPS. In particular: i. parent cmpanies resident in Italy fr tax purpses, required t submit grup cnslidated financial statements and with cnslidated revenues in the previus tax year f at least EUR 750 millin; and ii. subsidiaries resident in Italy fr tax purpses and cntrlled by a freign entity resident in a cuntry in which a CbCr bligatin has nt been implemented r in a cuntry which des nt allw an actual exchange f infrmatin with Italy; will be required t submit an annual reprt t the IRA indicating revenues, prfits befre tax, incme tax paid and due, and ther relevant elements f the effective ecnmic activity perfrmed, fr each cuntry in which the grup perates. 67

5 Cuntry-by-Cuntry Reprting An administrative penalty ranging frm EUR 10,000 and EUR 50,000 applies in the case f missin r incmplete filing f the required reprt; Within 90 days frm the entry int frce f the Law, the Ministry f Ecnmy and Finance will issue a Ministerial Decree prviding fr specific implementing rules. But at the mment, n Decree has been published. 68

6 Transfer Pricing ADMINISTRATIVE APPROACHES TO AVOIDING AND RESOLVING TRANSFER PRICING DISPUTES 69

7 Transfer Pricing Tls t prevent/takle tax assessments: Advance Pricing Agreement Unilateral Bilateral Mutual Agreement Prcedure DTC MAP AC MAP 70

8 Advance Pricing Agreements (APA) APA definitin: Arrangement that determines, in advance f cntrlled transactins, an apprpriate set f criteria fr the determinatin f the transfer pricing fr thse transactins ver a fixed perid f time (Para TPG); General remarks: APA may cver several r all f a taxpayer s internatinal transactins fr a given perid f time; APA is frmally initiated by the taxpayer; It requires negtiatins between the taxpayer and ne r mre tax administratins; The tax administratins shuld prvide cnfirmatin t the assciated enterprises that n transfer pricing adjustment will be made as lng as the taxpayer fllws the terms f the arrangements; There shuld als be a prvisin in an APA that prvides fr pssible revisin r cancellatin f the arrangement fr future years when business peratins change significantly, r when uncntrlled ecnmic circumstances critically affect the reliability f the methdlgy in a manner that independent enterprises wuld cnsider significant fr purpses f their transfer pricing. 71

9 Advance Pricing Agreements (APA) Unilateral APA: Arrangement cncluded between the taxpayer and the Tax administratin in its jurisdictin withut the invlvement f ther interested tax administratin; May affect the tax liability f assciated enterprises in ther jurisdictins. Bilateral and Multilateral APA: Arrangements cncluded between the taxpayer and the tax administratins f the tw (r mre) jurisdictins invlved by the transactins; Reduce the risk f duble taxatin; Prvide greater certainty t the taxpayers cncerned. 72

10 Advance Pricing Agreements (APA) Advantages f APA: It eliminates uncertainty thrugh enhancing the predictability f tax treatment in internatinal transactins; By predicting tax liabilities it prvides a favrable tax envirnment fr investments; May prevent cstly and time cnsuming examinatins and litigatins f majr TP issues fr taxpayers and tax administratin; Bilateral and multilateral APA substantially reduce r eliminate the pssibility f juridical r ecnmic duble r nn-taxatin; 73

11 Advance Pricing Agreements (APA) Disadvantages related t APA: Unilateral APAs may nt lead t an increased level f certainty fr the taxpayer invlved and a reductin in ecnmic r juridical duble taxatin since ther tax administratins may disagree with the APA s cnclusin; It may allw tax administratins t make a clser study f the transactins at issue than wuld ccur n a TP examinatin; Pssible tax administratin misuse f infrmatin disclsed in APA prcedure; APA prcedure may nt be available t small taxpayers because f its csts and time required. 74

12 Mutual Agreement Prcedure (MAP) General remarks: The mutual agreement prcedure is a well-established means thrugh which tax administratins cnsult t reslve disputes regarding duble taxatin Legal framewrk: Art. 25 f the OECD MC; Cnventin n the eliminatin f duble taxatin in cnnectin with the adjustment f prfits f assciated enterprises 90/463/EEC f 23 July

13 Mutual Agreement Prcedure (MAP) Cverage f Art. 25 f the OECD MC: Instances f taxatin nt in accrdance with the prvisins f the Cnventin (Paragraphs 1 and 2 f the Article); Interpretatin r applicatin f the Cnventin (Para. 3); Eliminatin f duble taxatin in cases nt therwise prvided fr in the Cnventin (Para. 3); Ecnmic duble taxatin arising frm transfer pricing adjustments made pursuant t paragraph 1 f Article 9 OECD MC (as explicitly stated by Para.9 f the Cmmentary n Art. 25 OECD MC). Cverage f the Cnventin 90/463/EEC f 23 July 1990: Duble taxatin ccurring between enterprises f different Member States as a result f an upward adjustment f prfits f an enterprise f ne Member State; Attributin f prfits and free capital t a permanent establishment; Applicable nly amng EU Cuntries. 76

14 Mutual Agreement Prcedure (MAP) Cmmitment t reach an Agreement: Art. 25 f the OECD MC: As t 2008 tax authrities were nt bliged t reach an agreement; After the intrductin f Para. 5 t art 25 OECD MC, in 2008, shuld the tax authrities d nt reach an agreement within 2 years frm the pening f the prcedure, the case shall be submitted t arbitratin (bligatin t reach an agreement); Almst nne f the duble tax treaties signed by Italy include Para. 5 f Art. 25 OECD MC. Cnventin 90/463/EEC f 23 July 1990: Tax authrities are bliged t reach an agreement 77

15 Transfer Pricing OECD/G20 BEPS Prject 78

16 OECD/G20 BEPS Prject BEPS Gals: Prviding cmprehensive and cherent slutins t Base Ersin and Prfit Shifting (BEPS); Securing revenues by realigning taxatin with ecnmic activities and value creatin; Creatin f a single set f cnsensus-based internatinal tax rules t address BEPS; Prtect tax bases while ffering increased certainty and predictability t taxpayers; Eliminatin f duble nn-taxatin; OECD and G20 cuntries, wrking tgether n an equal fting, adpted a 15 Actin Plan t address BEPS. 79

17 OECD/G20 BEPS Prject BEPS Framewrk: Publicatin f BEPS Actin Plan in July 2013; Three main themes: i. Restring the full effects and benefits f internatinal standards; thrugh realignment f taxatin and substance ii. iii. Cherence f crprate taxatin at the internatinal level; Transparency, cupled with certainty and predictability; Tw ther themes: iv. Digital ecnmy; v. Swift implementatin f measures; Final reprts delivered in Octber

18 Actin Plan 81

19 Actin Plan Actin 1 - Addressing the Tax Challenges f the Digital Ecnmy Actin 2 - Neutralising the Effects f Hybrid Mismatch Arrangements Actin 3 - Designing Effective Cntrlled Freign Cmpany Rules Actin 4 - Limiting Base Ersin Invlving Interest Deductins and Other Financial Payments Actin 5 - Cuntering Harmful Tax Practices Mre Effectively, Taking int Accunt Transparency and Substance Actin 6 - Preventing the Granting f Treaty Benefits in Inapprpriate Circumstances Actin 7 - Preventing the Artificial Avidance f Permanent Establishment Status 82

20 Actin Plan Actins Aligning Transfer Pricing Outcmes with Value Creatin Actin 11 - Measuring and Mnitring BEPS Actin 12 - Mandatry Disclsure Rules Actin 13 - Transfer Pricing Dcumentatin and Cuntry-by-Cuntry Reprting Actin 14 - Making Dispute Reslutin Mechanisms Mre Effective Actin 15 - Develping a Multilateral Instrument t Mdify Bilateral Tax Treaties 83