Over the last few years legislation  on transfer pricing has been a topic of growing interest, both because companies are increasingly internationalized, with an increase in cross-border intercompany transactions, but also due to the growing attention of the tax authorities towards this issue which leads to greater inspections of the prices charged in transactions carried out between companies resident in different countries but belonging to the same group.

National legislation, as well as the OECD Guidelines, has undergone several changes over the years. The provisions in force, more consistent with the guidelines on transfer pricing developed at international level, provide that prices charged in transactions with companies of the same group and not resident in the territory of the State are determined with reference to conditions and prices that would have been agreed between independent parties operating under conditions of free competition and in comparable circumstances.

Very important in this regard is the Act of the Revenue Agency no. 360494 of 23 November 2020 referring to the necessary documentation to be compliant with transfer pricing rules, which continues the process of aligning national provisions with OECD standards.

The new Act continues to provide as suitable documentation for transfer pricing purposes the Master File, containing relevant information for all entities of the multinational group with information relating to the activities carried out and the global allocation of the group’s income, and the local file, relating to the transactions carried out by the Italian entity. The Master File can be prepared in Italian or English, while the Local must be prepared in Italian. The Act introduces the obligation to sign TP documents, by electronic signature together with timestamp, by the submission date of the tax return.

The issue takes on great importance today when we note how the investigations by the tax auditors on intercompany prices do not only concern large international groups, but also groups of more modest size.

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