It is necessary to clarify the correct implications deriving from the modification of paragraph 7 of article 110 of the Italian Corporate Income Tax Act (CITA) after having read several confused comments. The adoption of the arms’ length principle (instead of the fair market value) is only a formal change. On the contrary, the introduction of article 31-bis of DPR 600, which provides the rule in case of a reduction of the Italian taxable income, represents a substantial change.
The results of simultaneous tax inspections to be carried out in several countries might imply the reduction of the Italian taxable income based on what provided by article 31-bis of DPR 600. This latter article provides, in addition to MAP cases, the possibility for the Italian taxpayer to submit an adjustment request to the Italian tax authorities in case foreign tax assessments become definitive have increased the foreign taxable income.
Here below the article written by Paolo Tognolo in Italian language and published on Italia Oggi newspaper, on April 28, 2017.