The Italian Revenue Agency issued its response to Ruling No. 174 on 21 August 2024, clarifying that the Italian the Country File (National Documentation) must be prepared and submitted in Italian language upon request.
The Country File (National Documentation) describes only intercompany transactions and pricing methods relating to the local entity.
The response follows after an Italian taxpayer submitted a country file to the Italian Revenue Agency in English and later translated it into Italian language. Citing increased compliance costs, the taxpayer inquired if the file could remain in English language and only be translated into Italian language if requested by the tax agency.
The Country File is one of the two optional annual reports required for transfer pricing penalty protection as per Article 26 of Law Decree No. 78/2010. The Master File is the second report that needs to be submitted, which details all intercompany transactions and pricing methods within the group.
The Italian Tax Authorities stipulated that the Country File, which pertains to domestic transactions, must be submitted in Italian language. However, taxpayers are allowed to provide attachments and the related Master File in English.
