The Transfer Pricing regime in Italy has evolved, providing new possibilities for multinational companies operating in the country. Recently, Italy has implemented a 90-day extension for the submission of 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 submit Transfer Pricing documentation up to 90 days after the original deadline. This measure is particularly relevant for companies that, due to the complexity of their international transactions, need more time to comply with related party pricing justification requirements. This change allows companies to properly prepare their documentation without facing immediate penalties for delays, which facilitates compliance.
Benefits of the new extension
Multinational companies that operate in Italy and have intercompany transactions will benefit from the extension by having 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 submitted within the established deadline. Moreover, the extension allows companies to gather accurate information on market comparables, functional and economic analysis, ensuring that Transfer Pricing policies are aligned with OECD guidelines and local regulations.
How to access the extension?
To apply for the 90-day extension, companies must submit a formal request to the Italian tax authorities. It is important that such a request is made before the original deadline to avoid fines for non-compliance. The submission of Transfer Pricing documentation within this extended period is crucial to ensure that the company remains compliant with its tax obligations.
Recommendation for companies
As Transfer Pricing is an area of high tax risk, it is vital that companies in Italy review and adjust their intercompany policies early. Proper documentation and justification of pricing between related parties not only avoids penalties, but also protects companies from significant adjustments that could affect their profitability.
Source: https://www.internationaltaxreview.com/article/2dvltmicsm8w0lk66xjpc/sponsored/guide-to-italys-90-day-extension-possibility-for-tp-documentation
