Shortened deadline for TP set of documents in Italy

Changes to the filing date for income tax returns in Italy will impact the relevant dates for ensuring that entities in Italy comply with transfer pricing reporting and documentation requirements. The bringing forward of these dates means that affected businesses should plan now to meet the new filing deadlines to ensure that they are not subject to tax penalties.

What’s new?

Legislative Decree no. 1/2024 revises the Italian calendar of tax reporting and payment obligations, and provides, inter alia, a new deadline for the submission of an income tax return to the Italian tax authority.

Starting from fiscal year 2023, the deadline for submitting an Italian income tax return is brought forward to the last day of the 9th month following the end of the tax period (instead of the previous deadline, set at the end of the 11th month).

Thus, where the fiscal year ends on 31st December 2023, the new deadline for submitting an Italian income tax return is now 30th September 2024.

This shortened deadline also impacts the drafting of transfer pricing documentation. This is because the Italian transfer pricing rules, together with directions issued by the Italian tax authority, require that, to obtain protection against the imposition of penalties in relation to transfer pricing assessments on prices applied in intra-group transactions, entities must:

• Execute the Italian transfer pricing documentation (i.e. both the local file of the Italian entities and the master file) by the submission date of the relevant Italian income tax return.
• Confirm possession of the necessary Italian transfer pricing documentation, when submitting the relevant income tax return.

What Simmons & Simmons can do for you

Protection from administrative penalties arising from a tax assessment issued by the Italian tax authority in relation to inter-company prices is available if the transfer pricing set of documents is drafted in accordance with the directions issued by the Italian tax authority. Compliance must be both formal (i.e. compliance with the structure of the documentation as identified by administrative guidelines) and substantive (i.e. the documentation must provide the tax authority with the data and information necessary to carry out a TP analysis, with a specific and accurate description of the transactions and comparability analysis, including a functional analysis).

Multinational groups with an Italian resident entity or Italian permanent establishment should carefully consider the impact of the new deadline in planning activities related to the drafting of the transfer pricing documentation and in scheduling such activities in advance to meet the new deadline.

The Simmons & Simmons international transfer pricing team has extensive expertise in assisting multinational groups on transfer pricing issues, including transfer pricing analysis to be carried out in line with OECD guidelines, drafting and finalising of transfer pricing documentation and tax litigation on transfer pricing.