TRANSFER PRICING RULES AGAINS ELUSIVE INTRAGROUP ACTIVITY

The intragroup transfer prices must be corresponding to economic value carry out between independent companies.

This is the principle at the base of transfer prices rules confirmed by several rulings (i.e. latest Italian Supreme Court of Cassation ruling no. 9613 on 5 April 2019, about royalties).

In accordance with the article 9 of OECD Model the Financial Authority have to verify the observance of arm’s-length principle by group of companies if: preferential price conditions for the subsidiary, suitable to increase or reduction taxable income (for instance, lower interest rates due).

It’s up to the taxpayer demonstrate that the operations have been carried out in compliance with customary economic value, whereas the Financial Authority assumes that the transactions have been carried out with a lower price (and not the financial advantage obtained).

In this way, it is possible to oppose all elusive intragroup activities realized by Italian companies with transfer of income to companies residing in Countries with reduced tax system.

So it is important that the taxpayer arranges all legal instruments needed in case of intragroup transfer operations and he keeps all documentations necessary to show the right conduct under a system of economic independence.

Our staff remains available for any clarification.