On 23 November 2020, the Italian tax authority published new guidelines for transfer pricing (TP) documentation that fully replace the previous guidelines of 2010. The new guidelines implement a Ministerial Decree of 14 May 2018 that established the rules for the practical application of the arm’s length principle.
A group company, or a branch of a foreign entity or an Italian company that owns a foreign branch, must prepare both Master file and Local file. A previous difference between group holding companies, sub-holdings of groups, and subsidiaries has been replaced, and the same set of documents is now required for all taxpayers. Although the structure of the Master file and the Local file is appear to be in accordance with the OECD’s BEPS Action 13 guidelines.
