The Transfer Pricing regime in Italy has evolved, providing new possibilities for multinational companies operating therein. Italy recently implemented a 90-day extension to file Transfer Pricing documentation, marking a significant change in tax compliance obligations.
What Is the 90-Day Extension?
The Italian tax authorities have introduced a relaxation allowing companies to file Transfer Pricing documentation up to 90 days after the original deadline. This measure is particularly relevant for companies that need more time to comply with related party pricing justification requirements due to the complexity of their international transactions. This amendment allows companies to properly prepare their documentation without facing immediate penalties for delays, which facilitates compliance.
Benefits of the New Extension
Multinational companies operating in Italy with intercompany transactions will benefit from the extension due to more time to prepare their detailed analysis and reports. In addition, the possibility of this extension reduces the risk of tax penalties as long as the extension request is filed within the established deadline. In addition, the extension allows companies to gather accurate information on market comparables and functional and economic analysis, ensuring that Transfer Pricing policies are under OECD guidelines and local regulations.
Extension Access
Companies must submit a formal request to the Italian tax authorities to apply for the 90-day extension. Such a request must be made before the original deadline to avoid fines for non-compliance. The Transfer Pricing documentation filing within this extended period is crucial to ensure the company’s compliance with its tax obligations.
Recommendation for Companies
Given that Transfer Pricing is an area of high tax risk, companies in Italy must review and adjust their intercompany policies early. Proper documentation and pricing support among related parties avoids penalties and protects companies from significant adjustments that could affect their profitability.
Source: ITR
