Italy: Guidance concerning transfer pricing documentation, penalty protection regime

Detailed guidance regarding the Master file, the Local (or country) file, low-value adding services

Penalty protection regime

The Italian tax authorities issued guidance—Circular letter No. 15/E 2021 (26 November 2021)—to clarify the transfer pricing documentation requirements and implementation of the “penalty protection regime.”

In the circular letter, the tax authorities confirmed among other items:

  • The structure and the contents of the transfer pricing documentation to be eligible for penalty protection must be in line with those outlined by the provision No. 360494 (23 November 2020).
  • The transfer pricing documentation must always include a Master file and a Local (“country”) file.
  • The transfer pricing documentation and related annexes must be electronically signed by the legal representative of the Italian taxpayer using a legally binding digital signature and a time-stamp must be affixed before the filing of the income tax return. If the Master file has already been signed by the legal representative of the direct or indirect parent company, it must also be digitally signed by the legal representative of the Italian taxpayer; the time-stamp must be affixed as well.

The circular provides further detailed guidance regarding the Master file, the Local (or country) file, low-value adding services, and rules regarding application of small and medium enterprises.

Read a February 2022 report [PDF 175 KB] prepared by the KPMG member firm in Italy 


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