The update of the transfer pricing country profile (“TPCP”) of Italy was recently published on the OECD website.
The TPCP is a very useful and interesting scheme with which the OECD provides a sort of census of the most characteristic aspects of the discipline regarding the transfer prices of as many as 52 states; the structure of the document is subdivided according to the main thematic areas of the general transfer pricing discipline, within which various questions are developed to which the Administrations are called to respond on the basis of current national legislation and the related best practice in the matter, then providing the national legislative or regulatory references.
As mentioned, Italy has recently updated its profile also in light of the approval of the Ministerial Decree. 14.05.2018 which, with an undoubtedly clarifying contribution and with an interpretative scope, sanctioned a formal approach of the national regulation on transfer prices to the OECD Guidelines and to the contents of the Final Report on Actions 8, 9 and 10 of the Beps Project.
We see below some of the most interesting ideas that can be drawn from the Italian TPCP update.
In the first place, as already sanctioned by the changes made to paragraph 7 of article 110 Tuir, and then by article 1 of the Ministerial Decree 14.05.2018, the “principle of free competition” has become immanent in all the regulation of the matter of transfer prices, overcoming the obsolete notion of “normal value” that was present in our legal system; this is not a merely lexical aspect, since it has significant effects, particularly with regard to the relevance that the OECD Guidelines on transfer pricing in the Italian regulatory framework assume.
And this is precisely the topic addressed and clarified in point 2) of the Italian TPCP, where it is recognized that the OECD Guidelines on transfer pricing are expressly referred to in the body of national legislation relevant to these purposes, together with the contents of the Shares 8 , 9 and 10 of the Beps Project, and that they also constitute the expression of “best practices” in the implementation of the provisions regarding documentation on transfer prices.
Therefore, the function of fundamental relevance of the OECD Guidelines is clarified also in the national system.
A second interesting aspect, in the context of the construction of the comparability analysis, is the recognition of the equal dignity between the use of “domestic” and international comparables.
This issue is very important, especially when the analysis leads to the construction of “pan-European” benchmarks, ie characterized by the presence of non-Italian resident companies, and in any case in all the circumstances in which, also in order to expand the number of subjects that make up the set of comparables, foreign companies are included, sometimes even predominantly.
Another very important topic confirmed by the Italian TPCP is that referring to the validity, for the purposes of assessing the free competition price, of any point included in the range of the comparability range; principle also established now clearly and unequivocally just by Article 6 of the Ministerial Decree 05/14/2018.
Consequently, every presumed and abstract supremacy of the value assumed by the median is less than the other values of the range normally expressed in interquartile intervals.
Finally, with regard to intra-group services, the application, also in the Italian legislation, of the simplified approach envisaged by the Beps 8, 9 and 10 Shares in terms of “low added value” services, also in light of the required by Article 7 of the DM 05/14/2018. This should therefore help companies and Administration to have a clear and defined reference base for the construction, and therefore the analysis, of the documentary support required to reach the recognition of the tax deduction of the costs incurred for the provision of these services without uncertainty.