In early 2021, two decisions of the Italian Supreme Court dealt with the issue of certain inter-company transactions that were not performed according to the arm’s-length principle due to the existence of an overall advantage for the multinational group.
Decision No. 8176
According to Decision No. 8176 of March 24 2021, the inter-company transaction was carried out between two companies belonging to the same group both residing in Italy.
As expressly provided by the Italian law, transfer pricing (TP) regulations do not apply to transactions between entities belonging to the same group, if both reside in Italy.
However, the Italian law allows the tax authorities to examine the adequacy of the inter-company transactions’ prices, by analysing whether the companies put in place uneconomical operations.
Published in: ITR (International Tax Review) - 28 April 2021