While expected, the news is no less significant. The list of companies that have chosen to engage in a cooperative relationship, based on continuous and structured dialogue with the Revenue Agency, has been expanded by 78 new applications. Praise is certainly due to the company executives who have embarked on this path, to the advisers who have supported them, and to the Revenue Agency’s Cooperative Compliance team, which — even before welcoming the 350 new officials dedicated to the programme — managed to handle interactions with a record number of applicants. Overall, the pool of “compliant” large taxpayers is growing ever wider: more than 220 companieshave now chosen the path of proactive dialogue since 2015, the year in which Legislative Decree No. 128/2015 was published.

Attention now turns to certifiers, who are required by 30 September 2026 to verify that the tax control frameworks implemented by the newly admitted companies comply with the requirements set out in the decree and the Guidelines, providing reasonable assurance of the company’s informed, reliable and structured management of its tax risk.

The figure for new admissions is even more striking in light of recent trends: 19 admissions in 2023, 31 in 2024 and 78 in 2025. This marks significant growth, reflecting the gradual maturation and consolidation of a system which, over time, has gained greater stability and clearer rules. In light of the recent reduction in the turnover threshold for access to the regime — set at €500 million from 2026 — it is reasonable to expect that in the coming years many companies will be called upon to make significant strategic choices.

Joining the cooperative compliance regime does not merely entail a formal decision; rather, it requires a demanding process involving the design and implementation of an integrated and effective system for identifying, measuring, managing, and monitoring tax risk. This is a long-term choice, involving a profound shift in mindset across the entire organisation: the transition from a predominantly reactive approach to a preventive one, based on greater managerial accountability and on a view of taxation as a structural component of corporate governance. This is by no means a trivial challenge, especially given that a reduction in turnover is usually accompanied by a smaller organisational structure and, consequently, a more limited availability of internal resources and expertise to devote to the implementation and management of the TCF.

One further element completes the picture. From 2028, the turnover threshold for access to the cooperative compliance regime will be further reduced to €100 million, expanding the pool of potentially eligible companies to over 11,000 productive entities. This will mark the definitive transition of the programme from an “elite” regime, reserved for a few large taxpayers, to a genuine systemic lever.

The challenge concerns not only businesses, but also — and perhaps even more so — the Revenue Agency, which must demonstrate that the robustness of the regulatory framework and the proper functioning of the tools designed by the legislator are capable of supporting, in a concrete and effective manner, a model based on proactive dialogue, quality of relationships and mutual trust. From this perspective, the process should continue along the path of increasing standardisation and, in certain respects, simplification of the instruments — without, however, compromising their substance and function — bearing in mind that an effective tax system should not aim to be “friendly” but rather to be fair.

The new structure will focus on the design of the Tax Control Framework and on advising on the adoption of organisational models that facilitate transparent and collaborative dialogue with tax authorities, assisting in particular businesses through all stages of the process of joining and managing the Cooperative Compliance regime. The launch of such practice area places ADVANT Nctm among the first Italian law firms to have a team dedicated to Cooperative Compliance, allowing businesses to benefit from the scheme as early as the 2026 financial year.

A professional with over 20 years of proven experience in the tax field - gained in leading industrial and fashion companies and strenghtened  at Accenture as Managing Director Tax for Southern & Central Europe & Middle East for more than fifteen years, Luca La Barbera has developed leading expertise in the creation and implementation of tax control frameworks (TCFs) and in the Cooperative Compliance admission and management process, helping to define standards that are now benchmarks for Italian and international businesses.

The Cooperative Compliance regime is set to play a central role in the coming years and represents one of the most promising areas for Italian tax law, renewing and innovating the relationship between tax authorities and businesses according to the principles of transparency and mutual trust and promoting preventive and shared tax risk management. The prospects for the development of the scheme are particularly significant thanks to the gradual reduction of the access threshold, which will be €500 million in turnover from 2026 and €100 million from 2028, significantly increasing the number of eligible businesses.

The entry of Luca La Barbera and the creation of the new business area strenghten ADVANT Nctm’s growth strategy, achieved through the aggregation of boutiques or teams of highly specialised professionals in complementary and synergistic fields. Over the last year, the firm has sped up this process with significant transactions involving regulatory, corporate criminal and labour law, which also led to the creation of dedicated practice areas.

Today, with Luca La Barbera and the launch of the practice area dedicated to Cooperative Compliance, such strategic development approach, including lateral hires, extends to the tax department (currently comprising around 30 professionals), an area experiencing strong growth and increasingly crucial in the field of client advisory services. 

“The arrival of Luca La Barbera is further confirmation of our targeted growth strategy, based on attracting professionals or firms with highly distinctive skills and high development potential. Such approach allows us not only to continue investing in talents and specialisations capable of bringing immediate and long-term value, but also to constantly expand our range of services and anticipate the needs of a rapidly evolving market, focusing on innovation and high-quality advice to respond effectively to the businesses’ challenges” said Paolo Montironi, Senior Partner at ADVANT Nctm.

“I am particularly proud to join ADVANT Nctm, a firm that has proven its ability to grow with vision, investing in areas with great prospects. Collaborative compliance is set to become a pillar of the Italian tax system, and I believe that our work can make a real contribution to spreading tax risk management models based on transparency and dialogue with the authorities, creating value for businesses and for the country. Being able to develop such project within a firm of the calibre of ADVANT Nctm is a strong incentive for me to contribute concretely to the growth and strengthening of the firm in the long term,” said Luca La Barbera.

With Luca La Barbera joining the firm, the total number of partners at ADVANT Nctm rises to 85.

The dramatic increase in the volume and complexity of international intra-group trade, coupled with increased scrutiny of transfer pricing issues by tax authorities, makes transfer pricing documentation one of the top tax compliance priorities on the agendas of both tax authorities and businesses. 

Drafting comprehensive transfer pricing documentation is now considered the ‘minimum standard’ for ensuring tax compliance, managing tax risk and promoting tax transparency purposes in multinational groups. However, transfer pricing audits are increasingly scrutinizing the consistency between a company’s transfer pricing policies and the documentation provided.

As a result, it has become crucial for multinational groups to proactively assess and validate their transfer pricing arrangements through stress testing, ensuring robust compliance and minimizing potential audit risks.

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Roma, 8 Novembre 2024

1. Introduction

The taxation for registration tax purposes of deeds creating rights of superficies on agricultural land is an issue of great relevance and interest for the renewable energy sector, since it is a contractual arrangement widely used in the context of the construction of plants for production of electricity from wind and photovoltaic sources. Such contractual agreements indeed allow producers of energy from renewable (specifically wind or photovoltaic) sources to secure the availability of the agricultural areas and land on which such plants are generally installed (and at the same time the “bankability” of the projects themselves), without acquiring full ownership of such land.

For registration tax purposes, a deed creating a right of superficies falls within the “deeds subject to registration within a fixed deadline”, in relation to which Article 1, paragraph 1, of the Tariff, Part One, attached as Annex A to Presidential Decree No. 131/1986 (“T.U.R.”) provides as follows:

• in the first sentence: “deeds transferring title to real estate in general for valuable consideration and deeds transferring or creating in rem rights of use, including pure and simple waiver thereof, measures of expropriation in the public interest and compulsory transfers” are subject to proportional registration tax determined at the rate of 9%;
• in the third sentence: “if transfer relates to agricultural land and its appurtenances in favour of persons other than farmers and professional agricultural entrepreneurs, registered in the relevant social security and welfare management system", the relevant deeds are subject to proportional registration tax determined at the rate of 15%.

In respect of deeds creating rights of superficies on agricultural land in favour of persons other than farmers and professional agricultural entrepreneurs, Italian tax authorities have historically stated their subjection to proportional registration tax at the rate of 15%¹, deeming such case comparable to the concept of “transfer” referred to in the third sentence of Article 1, paragraph 1, cited above².

The approach expressed on this point by the tax administration had already been disregarded by the case law of the Italian Supreme Court, based on considerations aimed at highlighting the impossibility of endorsing, from a legal perspective, the assimilation proposed by the tax authorities.

More specifically, by decision No. 3461/2021, the Italian Supreme Court, ruling on the registration tax applying to a deed creating rights of superficies on agricultural land for the construction of a photovoltaic plant, stated that  “From a plain reading of the provision [third sentence of Article 1 of the Tariff, Drafter’s note] it emerges  that the same applies to the transfer and not to the “creation” of an in rem right of use”, outlining the impossibility of assimilating the two cases, since  “the creation of a right of superficies on land by an assignor/creator is not regulated by the provisions applying to transfer deeds”, precisely because “a right of superficies is ‘created’, and not ‘transferred’".

Based on the above considerations, the Italian Supreme Court decided to endorse the approach previously expressed by judgment No. 16495/ 2003³, issued in a case concerning the creation of easement rights, considering it “similar to the one under consideration for tax purposes” [creation of right of superficies, Drafter’s note]”, deeming also the case of creation of the right of superficies under consideration falling within the scope of the provision set out in the first sentence of paragraph 1 of Article 1 of the Tariff, Part One, with consequent application of proportional registration tax at the rate of 9%.

2. The Reply to application for a ruling No. 365/2023.

Notwithstanding the clear interpretative/operational criterion outlined by the Italian Supreme Court, with respect to the right of superficies the Tax Authorities - unlike in relation to the right of easement - maintained the “assimilation” thesis, reaffirming their position in their Reply to application for a ruling No. 365/2023.

In such document, with respect to the legal principle stated by the Italian Supreme Court by decision No. 3461/2021, cit.  – referred to by the  applying Notary in support of its interpretation – the Revenue Agency stated that the  grounds expressed in such decision were not deemed prejudicial to its view  since “although concerning a dispute regarding the taxation of a deed of creation of the right of superficies, the Italian Supreme Court expressly recalls previous rulings on the right of easement as well as the concept according to which “it does not entail the transfer of rights or faculties of the owner of the servient estate”, which, as pointed out, is peculiar to the right of easement as defined by Articles 1027 et seq. of the Italian Civil Code and not to other in rem rights of use”.

Based on the above considerations, the Agency therefore concluded that “the taxation principles set out in the aforementioned Circular No. 18/E of 2013, for registration tax purposes, are still deemed applicable. Therefore, the deed of creation of the right of superficies in respect of the agricultural land at issue is subject to registration tax at the rate of 15%, in addition to mortgage and cadastral taxes at the fixed rate of EUR 50 each”.

3. Decision of the Italian Supreme Court No. 27293/2024.

In its very recent decision No. 27293/2024, the Italian Supreme Court ruled again on the taxation for registration tax purposes of deeds creating rights of superficies on agricultural land⁴, confirming the application of the rate provided for by the first sentence of Article 1, paragraph 1, of the Tariff, Part One, attached as Annex A to Presidential Decree No. 131/1986 (namely, 8% pursuant to the text applicable ratione temporis to the case at issue and 9% according to the text currently in force).

Consistently with the position previously held, the Italian Supreme Court - recalling that “In both scenarios contemplated by Article 952 of the Italian Civil Code, there is a separation between the legal ownership of the land and that of the building (to be constructed or already existing) [which, Drafter’s note ) does not entail, however, a splitting of the legal ownership of the land, which [...] remains with the grantor” - reiterated that “by reason of the intrinsically temporary nature of the right, surface tenure must be considered a right ontologically different from fee simple interest” and the consequent need, for tax treatment purposes, to keep the transfer deeds distinct from those creating in rem rights of use, considering also that “when the legislator wanted to tax also the deeds creating said rights, it made express provisions in such regard⁵”.

In confirming its position, the Italian Supreme Court expressly stated that the guidelines provided by the tax authorities⁶, traditionally invoked by them in support of the payment notices issued in relation to such particular case, are not binding.

It appears significant that the Italian Supreme Court not only expressly referred to and confirmed the view already laid down in decision No. 3461/2021, but de facto considered it as well established.

Indeed, following the appeal lodged by the Attorney General's Office, the Deputy Counsellor proposed an accelerated settlement pursuant to Article 380-bis of the Italian Code of Civil Procedure, due to the manifest unfoundedness of the grounds of complaint, noting that "The word transfer contained in Article 1 of the Tariff attached to Presidential Decree No. 131 of 1986 was used by the lawmaker to indicate all those deeds providing for the transfer from one party to another of the ownership of real estate or the holding  of in rem rights of use in real estate and cannot be referred to deeds creating in rem rights of use such as an easement, which does not entail the transfer of rights or faculties of the owner of the servient estate but the limitation of the latter's right of ownership to the benefit of a given dominant estate)". 

The decision in question, therefore, further contradicts the position reiterated in the Reply to application for a ruling No. 365/2023 cited above, whereby the Tax Administration had reaffirmed the application of the 15% rate to deeds creating a right of superficies on agricultural land, notwithstanding the fact that the notary public drawing up the deed had made express reference to the principle established by decision No. 3461/2021 cited above.

Considering the full compliance of the decision with the proposal of the Deputy Counsellor, the losing Public Treasury was, inter alia, ordered not only to pay the “increased” litigation costs, but also to pay the further sums provided for by Article 96, paragraphs 3 and 4 of the Italian Code of Criminal Procedure, an element that may lead the Tax Administration to consider ceasing recourse to litigation, as occurred with respect to deeds of easement ⁷.
 

¹ Resolution No. 92/E/2000, Circulars Nos. 18/E/2013 and 36/E/2013. According to the Agency’s view, although  the third sentence of Article 1 cit., as is worded, limits the application of the  15% rate to deeds involving the “transfer” of agricultural land, lawmakers (allegedly) intended to assimilate the concept of “transfer” to the concept of “deed of transfer” or “deed transferring or creating in rem rights of use in real estate, so that the term “transfer” should be deemed to also cover the “deeds creating in rem rights of use in real estate”  expressly mentioned in the first sentence of paragraph 1.

² Conflicting with such view was the more recent Resolution No. 4/E of 15 January 2021, which, endorsing the view taken by the Italian Supreme Court of the point, stated that, for the purposes of the registration tax, a  deed creating easement rights on agricultural land for persons other than farmers and agricultural entrepreneurs should fall within the scope of the general provision referred to in the first sentence of Article 1, paragraph 1, of the Tariff, Part One, declaring the indications contained in the former circulars de facto  superseded. (Cass. judgment No. 16495/2003, conf. Cass. judgments Nos. 22198/2019, 22199/2019, 22200/2019 e 22201/2019, Cass. decisions 6671/2020, 6677/2020 and 22118/2020).

³ According to which "The term “transfer” contained in Presidential Decree No. 131 of 1986, Article 1, of the attached tariff was used by lawmakers to indicate all those deeds that involve the transfer of title to real estate or of in rem rights of use in real estate from one person to another and cannot be referred to deeds  creating in rem rights of use such as right of easement, which does not involve the transfer or rights or faculties of the owner of the servient estate but the limitation of its ownership right in favour of a certain estate (dominant estate)"

⁴ In particular, the case ruled by the Italian Supreme Court concerned a deed creating a right of superficies on agricultural land for the construction of a photovoltaic plant.

⁵ Making reference, by way of example, to Article 9, paragraph 5 of Presidential Decree 917/1986. 

⁶ In particular, by Circular No. 36/E/2013 invoked by the applicant Authority in support of its appeal, in respect of which the Italian Supreme Court recalled “that the circulars whereby the Revenue Agency provides an interpretation of a tax provision, even if containing instructions to hierarchically subordinate departments, express exclusively a non-binding opinion, not only for the departments to which they are addressed, but also for taxpayers, for the same authority that issued them and for the court; therefore, the so-called ministerial interpretation of tax provisions, whether contained in circulars or resolutions, does not represent a source of law, nor is it subject to the review of legitimacy exercised by the Supreme Court (pursuant to Articles 111 of the Italian Constitution and 360 of the Italian Code of Civil Procedure), since they are not the expression of regulatory activity, but rather an internal activity of the public administration itself, intended to exercise a directive function with respect to the dependent departments, but having no effect on the tax relationship (Cass. en banc No. 23031 of 2007; Cass. No. 35098/2022; Cass. No. 18618 /2019; Cass. No. 10195 of 2016)”.

⁷  See above, Resolution No. 4/E of 15 January 2021.

1. Flat-rate regime for the self-employed (Article 1, paragraph 54, of 2023 Budget Law)

As concerns the favourable tax regime for self-employed people (“flat-rate regime”), regulated by Article 1, paragraphs 54- 89, of Law No. 190 of 23 December 2014, Article 1, paragraph 54, of 2023 Budget Law, from which natural persons engaged in business and professional activities can benefit, has raised to €85,000 the threshold of revenues earned or remuneration received, adjusted per year, which allows for the application of the 15% flat-rate tax in lieu of the progressive rates provided for under the standard regime.The loss of the requirements for accessing the scheme or the occurrence of a reason for exclusion – as defined below – will involve the flat-rate scheme ceasing to apply from the year following the year when any of the aforesaid circumstances occurs; however, if the revenue earned or the remuneration received exceeds the threshold of €100,000, the flat-rate scheme will cease to be effective from the tax period in which the threshold is exceeded.As concerns the access requirements, it should be noted that the flat-rate regime is applicable where, with reference to the previous tax year, in addition to compliance with the aforementioned threshold of revenues earned or remuneration received, costs not exceeding EUR 20,000 were incurred for:

• ancillary work;
• employees;
• co-workers (see Article 50, paragraph 1, c) and c-bis) TUIR);
• profits paid on a profit-sharing basis to associates contributing solely work;
• sums paid for work performed by the entrepreneur or his/her family members.

In addition, royalties received as copyright contribute to the EUR 85,000 threshold only if inherent to the professional's self-employed activity.As concerns the conditions for exclusion, it is worth noting that the flat-rate scheme shall not apply in case of:

• persons subject to special VAT regimes (e.g. travel agencies or resellers of second-hand goods);
• persons having tax residence abroad (with the exception of residents in EU/EEA countries who generate at least 75% of their total income in Italy);
• persons carrying out business activities involving, exclusively or predominantly, the sale of buildings or portions thereof, building land or new means of transport;
• persons carrying on a business, trade or profession, who simultaneously carry on activities such as:
  • participation in partnerships, professional associations or family businesses;
  • direct or indirect control limited liability companies or joint ventures engaged in economic activities directly or indirectly related to those carried out by persons engaged in business, the arts or professions;
• persons carrying on business predominantly for employers with whom there are, or were, employment relationships in place in the two previous tax periods or with persons directly or indirectly associated with them;
• persons who received income from employment and/or similar work in the previous year in excess of the threshold of €30,000 (however, the threshold does not have to be verified if the employment relationship has ceased).

The flat-rate scheme has no duration limit, so it can be applied as long as the requirements are met and the conditions for access are verified. 

2. Incremental Income Tax (Article 1, paragraphs 55 to 57 of 2023 Budget Law)

3. Performance and profit-sharing bonuses (Article 1, paragraph 63 of 2023 Budget Law)

Let's see how: Italian law has ensured since 2006 (with the so-called Bersani Decree) the halving of mortgage and cadastral taxes to "close-ended" real estate funds set up under Italian law that purchase instrumental properties, such as offices and logistics centers. Two German "open-ended" real estate funds had purchased just in 2006 instrumental real estate in Italy, yet discounted the deed taxes in full. So it was that the German funds, believing that they were in a perfectly comparable position to the Italian close-ended funds, asked for a refund of half of the taxes, which they were denied by the offices of the Internal Revenue Service.

The two funds then initiated litigation to recover the overpaid taxes and, after being unsuccessful in the lower courts, obtained from the Supreme Court in 2019 a referral of the case to the EU Court of Justice. In 2021, the Luxembourg Court found a violation of the free movement of capital, since German funds proved to be entirely comparable to domestic funds (the circumstance that the former were "open," while the latter were "closed," was not considered suitable to justify discriminatory treatment) but redirected the case to the Court of Cassation, asking it to verify whether there was a justification of general interest, such as tackling speculation on the real estate market, such that it could still allow a differential treatment.

At the end, the Supreme Court, having made the appropriate verifications, ruled out the non-existence of such justifications and - in yesterday's decision - therefore granted the two German open-end funds the right to a refund of the taxes overpaid in 2006, leveling the tax burden on par with what would have been due from Italian close-ended funds.

Beyond the purely technical and legal aspects, the Supreme Court's decision can only be warmly welcomed by all market players: the easing of the burden of transfer taxes even for EU real estate funds will in fact benefit competition and the attractiveness of the Italian market for large real estate investments.

ADVANT Nctm, with a team led by Paolo Rampulla, a partner in the tax department, and consisting most recently of Sante Ricci, Angelo Anglani, Daniele Griffini and Egidio Greco, has supported the two funds in this more than decade-long challenge.

1. “Trade” discounts

A “trade” discount is typically a discount affecting directly and unconditionally the price of goods on the basis of specific contractual provisions.Trade discounts are relevant for VAT purposes, according to the law, as they directly reduce the taxable amount of a sale of goods, whereas “financial” discounts - in principle - do not directly reduce the taxable amount, since they are granted after the invoice has been issued, typically in connection with an advance payment.In this respect, the Court of Cassation decision No. 21182 of 08/10/2014, ex multis, sets out two conditions for identifying VAT-relevant discounts (trade discounts):– “that (...) a discount is given on the sale price;– that the reduction of the consideration to the customer is the result of an agreement, whether documentary, verbal or even subsequent, since the rule makes no distinction whatsoever”. Irrespective of any assessment as to their nature, discounts (on purchases) are recognized in the accounts as positive income components that contribute to the determination of the IRES and IRAP tax base and increase the overall marginality.

2. The granting of intra-group discounts in market practice and the determination of the “normal” value relevant for transfer pricing

The practice of offering price reductions (or discounts) to entities belonging to the same group is quite common in the pricing policies of multinational groups and in normal practice.The discount is typically granted in return for the associated company performing certain functions, including - in particular - promoting the sale of products. Lower purchase prices allow the (intragroup) distributor to operate in the local market with greater commercial competitiveness, in particular when the application of discounts is a widespread practice in the reference market and/or when the associated company and/or the parent company already apply discount policies to their customers - whether internal or external to the group.Article 110(7) of the TUIR, in its current wording, provides that the components of income arising from transactions with companies not resident in the territory of the State, which directly or indirectly control the company, are controlled by it or are controlled by the same company controlling the company, shall be determined by reference to the terms and prices that would have been agreed upon between independent parties operating in conditions of free competition and in comparable circumstances, if they result in an increase in income.By contrast, the wording of Article 110(7) in force in the years covered by the decisions in question (2013 and 2014), expressly referred to the “normal” value defined in Article 9 of the TUIR for the determination of intra-group transfer prices.Article 9 of the TUIR provides that, in order to determine the “normal” value, it is necessary to consider, as far as possible, the price lists or tariffs of the entity that supplied the goods or services and, failing that, the market reports and price lists of the chambers of commerce and professional fees, “taking into account customary discounts”, without exception and without nominal distinctions.Therefore, according to the tax legislation, discounts granted to group companies are not unlawful.However, the Supreme Court decisions No. 7343/2011 and No. 24005/2013 interpreted the reference to “customary discounts” under Article 9 of the TUIR in a formalistic way, thereby considering as such only those discounts usually applied by the entity in its own price lists or tariffs (if any) for transactions made under arm’s length conditions, i.e. for economic transactions carried out with entities outside the group, thus excluding discounts granted in intra-group transactions from the determination of the normal value. So, according to said decisions, the normal value to be attributed to intra-group transactions must certainly take into account discounts, but only if they are also granted to entities not belonging to the group.The interpretation given by the above-mentioned decisions does not appear to be applicable in all cases and circumstances. The analysis of the conformity of the discounts granted to associated companies (i.e. of the sales prices charged) with the principle of “normal” value must be carried out, de facto - before even considering the possibility of classifying them as “customary discounts” - through an investigation that takes into account the “role” played by such components in the value chain of a group, determining whether price reductions are actually intended to remunerate additional, or in any case different, functions or risks with respect to those assumed by third party purchasers; or, otherwise, are due to a real difference in the marketing stage where the “compared” transactions take place.Indeed, in this regard, the OECD Guidelines, which the Italian tax legislator has followed with respect to the taxation of intra-group transfer prices, allow the distributor to receive additional remuneration in the form of a reduction in the supply price.In particular, with regard to the remuneration of distributors, the 2017 OECD Guidelines provide that “An independent distributor in such a case [i.e., when performing promotional and marketing activities that generate a future benefit for another entity in the group such as the supplier of the good] would typically require additional remuneration from the owner of the trademark or other intangibles. Such remuneration could take the form of higher distribution profits (resulting from a decrease in the purchase price of the product), a reduction in royalty rate, or a share of the profits associated with the enhanced value of the trademark or other marketing intangibles, in order to compensate the distributor for its functions, assets, risks, and anticipated value creation” (OECD Guidelines, par. 6.78).Therefore, in such circumstances, the application of a discount to the purchase price is admitted in the presence of a distributor (belonging to a group) which, in the ordinary course of its business, is also engaged in promotional activities, thereby directly bearing the costs of market development to an extent exceeding the investments of an “independent” distributor.In the absence of any contractual obligation to refund the costs incurred for such activities, the distributor must therefore be granted additional remuneration in the form of a reduction in the supply price.The Italian Tax Authorities themselves allow the granting of intra-group discounts in such circumstances, in accordance with the indications contained in the Revenue Office Circular No. 1/E of 15/02/2013. In particular, the issue brought to the attention of the Authorities concerned the adoption by an Italian company of a legitimate transfer pricing policy based on discounts and aimed at guaranteeing to its foreign subsidiaries, entrusted with the performance of a distribution activity (accompanied by an “essential promotion function”), a minimum remuneration for such activities. The answer given in this regard makes reference to the general principles set forth in the OECD Guidelines, according to which - in order to determine the normal value of intra-group transfer prices - it is always necessary to take into account all comparability factors between companies belonging to groups and independent parties. By this reference, the Revenue Office accepts the possibility of applying discounts in order to remunerate the additional activities carried out by the foreign affiliate.It is, therefore, advisable that any assessment of the consistency of intra-group discounts with the principle of normal value be expressed on the basis of an accurate economic analysis aimed at weighing their appropriateness to the specific case.The discount granted to a company operating in a market (such as the Italian and European market) which is highly competitive on prices, is nothing more than a “commercial” measure allowed, and perhaps even necessary, to the acquiring subsidiary in order to adequately compete with its competitors. An additional discount margin may become - in such a context - the “commercial” element that “makes the difference” with respect to competitors.

3. The position of trial judges in the decisions under review

In the judgments under review, the Milan Provincial Tax Commission upheld the taxpayer’s appeals and invalidated the related IRES and IRAP assessments.First of all, the judges held that the Office’s arguments in support of the reclassification of discounts from trade discount to financial discount were flawed by a certain generality, and lacked detailed arguments with respect to the functions and risks respectively assumed by the group contractors.On the merits, the judges valued the fact that transfer prices were regulated by a written contract between the parties, drawn up according to market standards. The Office’s unproven claim that the contract had not been negotiated was dismissed on the basis that it was considered likely that the management of the Italian company had acted within the scope of its management duties, seeking to maximise the profit of the company run by it.According to the judges, the discount may well find its rationale - even intra-group - in commercial reasons, such as the drive to sell products and increase market share, which cannot be generically dismissed. The fact that the Italian company only markets products under the brand name of the foreign parent company, and is the sole distributor of the group in Italy, is likewise irrelevant.So, the Commission upheld the appellant’s claim that the tax legislation does not establish the unlawfulness of discounts granted to group companies operating on an exclusive basis, since Article 9 of the TUIR refers to “customary discounts” with no exception whatsoever.Moreover, in the case in question, the prices of sales from the foreign parent company to the Italian subsidiary, albeit net of discounts, were lower than the minimum prices quoted on official international price lists for the products involved in the controlled intra-group transaction. Therefore, according to the judges, the discount granted was logical in order to be able to properly compete with competitors.Finally, the judges pointed out that the trade discount provided for in the contract is genuine and has led to a tangible increase in the Italian tax base, a factual circumstance which - according to the judges - deprives the Office’s arguments of any logical sense. Indeed, irrespective of the nature of the discount, it is a fact that the discount in question was recognised in the accounts as a positive income component which contributed to the determination of the appellant company’s IRES and IRAP taxable base in the years subject to audit.In summary, the decisions under review confirm the relevance of trade discounts applied in intra-group transactions for the purpose of assessing the compliance of the relevant transfer prices with arm’s length principles, in the context of a careful comparability analysis between intra-group transactions and transactions between independent third parties as required by the OECD and Tax Authorities guidelines.

Conversion of deferred tax assets into tax credits following the transfer of non-performing loans

• with reference to the tax period preceding that in progress as of the date of entry into force of Decree Law No. 18/2020 (17 March 2020), have revenues or compensation not exceeding 2 million Euros (Article 62, paragraph 2, of Decree Law No. 18/2020);
• have their tax domicile, registered office or operational headquarters in the municipalities that are most affected by the COVID-19 epidemiological emergency (Article 62, paragraphs 3 and 4);
• carry out their business in the sectors that are most affected by the COVID-19 epidemiological emergency (Article 8 of Decree Law No. 9/2020 and Article 61, paragraphs 2 to 5, of Decree Law No. 18/2020).

For persons carrying out business, artistic or professional activities who have their tax domicile, registered office or operational headquarters in Italy and revenues or compensation not exceeding 2 million Euros in the tax period prior to the date of entry into force of the Decree Law, self-assessment tax payments expiring in the period between 8 May and 31 March 2020 shall be suspended until 31 May 2020, pursuant to Article 62, paragraphs 2 and 5, of Decree Law No. 18/2020, in relation to:

• withholding tax under Articles 23 and 24 of Presidential Decree No. 600/1973 and the withholding tax relating to additional regional and municipal income taxes payable as withholding agent;
• Value Added Tax;
• social security and welfare contributions, and compulsory insurance premiums.

For persons carrying out business activities, artistic or professional activities who have their tax domicile, registered office or operational headquarters in the Provinces of Bergamo, Cremona, Lodi and Piacenza, the suspension of VAT payments shall apply until 31 May 2020, irrespective of the amount of income or compensation earned.Payments subject to suspension shall be made, without the application of penalties or interest:

• in a single installment by 31 May 2020, or
• by installments up to a maximum of 5 equal monthly installments, from May 2020.

There will be no repayment for amounts already paid.For the persons who have their tax domicile, registered office or operational headquarters in the municipalities specified in Annex 1 to the Council of Ministers Presidential Decree of 1 March 2020 of the former “red zone” (i.e., Bertonico, Casalpusterlengo, Castelgerundo, Castiglione D'Adda, Codogno, Fombio, Maleo, San Fiorano, Somaglia, Terranova dei Passerini, Vò), the provisions of Article 1 of the Decree of the Minister of Economy and Finance of 24 February 2020 remain unchanged. More specifically, the Ministerial Decree of 24 February 2020 provides for the suspension until 31 March 2020 of withholding tax, payments of tax and withholding tax and tax obligations falling due in the period between 21 February 2020 and 31 March 2020.The obligations and payments subject to suspension must be fulfilled in a single instalment within one month following the end of the period of suspension.Article 8, paragraph 1, of Legislative Decree No. 9/2020 suspended until 30 April 2020, for hotel and tourism businesses, travel and tourism agencies and tour operators having their tax domicile, registered office and operational headquarters in the territory of the State:

• the deadlines relating to the payment of withholding taxes under Articles 23, 24 and 29 of Presidential Decree No. 600/1973;
• the deadlines relating to obligations and payments related to social security and welfare contributions and compulsory insurance premiums.

Article 61 of Legislative Decree No. 18/2020 extends the postponement referred to in Article 8, paragraph 1, of Decree Law No. 9/2020 to further subjects operating in the sectors that are most affected by the emergency such as the sports, art and culture, gambling and betting, transport and catering, education and assistance, trade fairs and events management sectors[1].In this regard, the Inland Revenue Agency, by Resolution No. 12/E of 18 March 2020, specified, for reference purposes, the ATECO codes referable to said economic activities.For hotel and tourism businesses, travel and tourism agencies and tour operators as well as for the above-listed subjects, VAT payments expiring in March 2020 shall be suspended. Payments subject to suspension shall be made by the above entities, without the application of penalties and interest, either in a single payment by 31 May 2020 or by instalments up to a maximum of 5 equal monthly instalments from May 2020. There will be no repayment for amounts already paid.Only for national sports federations, sports promotion bodies, professional and amateur sports associations and clubs, the aforesaid suspensions shall apply until 31 May 2020. Suspended payments shall be made by the above entities, without the application of penalties and interest, either in a single payment by 3 June 2020 or by installments up to a maximum of 5 equal monthly installments from June 2020. There will be no repayment for amounts already paid.Specific provisions are laid down for the payment of the so-called “single tax withdrawal” (“Prelievo Erariale Unico, PREU”) on equipment suitable for lawful gaming and the payment of the relevant license fees expiring on 30 April 2020, which are postponed to 29 May 2020 (see Article 69)[2].Suspension of deadlines for other tax compliance obligationsArticle 62, paragraph 1, of Legislative Decree no. 18/2020 provides for the suspension of tax obligations other than tax payments and the duty to apply withholding tax and withholding taxes relating to the additional regional and municipal income tax, expiring in the period from 8th to 31st May 2020. Such obligations subject to suspension must be complied with by 30 June 2020 without the application of penalties (Article 6, paragraph 6, of Legislative Decree No. 18/2020).In any event, the provision of Article 1 of Decree Law No. 9/2020 on the deadlines for the filing of 2020 pre-filled tax returns shall remain unaffected.In particular, Article 1 of Decree Law No. 9/2020, brought forward from 1 January 2021 to 1 January 2020 the effective date of the new provisions introduced by Article 16-bis, paragraph 5, of Decree Law No. 124/2019 concerning the rescheduling of the deadlines for tax assistance and pre-filled tax returns relating to 730 Forms and provided for the relevant postponement as follows:

• from 23 July 2020 to 30 September 2020, of the deadline for submission of 730/2020 forms relating to the 2019 tax period;
• from 9 March 2020 to 31st March 2020, of the deadline for electronic transmission to the Inland Revenue Agency of the Single Certification by withholding agents relating to the 2019 tax period (the deadline of 31 March 2020 for their delivery to the substituted entities has remained unchanged);
• from 15 April 2020 to 5 May 2020, of the deadline by which the pre-filled income tax return is made available to the taxpayer on the relevant website of the Inland Revenue Agency;
• from 28 February to 31 March 2020, of the deadline for third parties (banks, insurance companies, social security institutions, condominium administrators, universities, nursery schools, veterinary surgeons, etc.) to transmit to the Inland Revenue Agency the data relating to charges and expenses incurred that are relevant to pre-filled tax returns for the 2019 tax period.

Article 62, paragraph 7, of Legislative Decree No. 18/2020 provides that, for persons with revenues or compensation not exceeding 400,000 Euros in the tax period preceding that in progress at the date of entry into force of the Decree Law (17 March 2020), revenues and compensation earned in the period between 17th March 2020 and 31 March 2020 shall be exempted from the withholding tax referred to in Articles 25 and 25-bis of Presidential Decree No. 600/1973 applied by withholding agents, provided that in the previous month they did not incur expenses for employment and similar services.The taxpayers who avail themselves of the above option are required to issue a specific declaration stating that revenues and compensation are not subject to withholding tax pursuant to Article 62, paragraph 7, of Legislative Decree No. 18/2020 and shall pay the amount of the withholding tax not applied by the withholding agent in a single instalment by 31 May 2020 or by instalments up to a maximum of 5 equal monthly instalments from May 2020, without the application of penalties and interest.Payment deadlines for charges entrusted to collection agentsArticle 68, paragraph 1, of Decree-Law No. 18/2020 provides for the suspension of payments falling due in the period from 8 March 2020 to 31 May 2020, arising from:

• tax bills issued by collection agents;
• assessment notices and enforcement documents issued by the Inland Revenue Agency;
• debit notices issued by social security institutions;
• enforceable assessment notices issued by the Customs and Monopolies Agency and by local authorities;
• payment injunctions issued by local authorities and enforceable documents issued by local authorities, both for tax revenues and assets (see paragraph 2).

The aforesaid payments must be made in a single instalment by 30 June 2020 and there will be no repayment for amounts already paid.Paragraph 3 provides for the postponement to 31 May 2020 of the deadline for payment of the sums due for accessing (i) the pending voluntary settlement of tax bills procedure, so-called “Scrapping ter” (“Rottamazione ter”) and (ii) the pending remission of tax bills procedure, so-called “Final Settlement and Write-off” (“Saldo e Stralcio”) procedures, expiring on 28 February 2020 and 31 March 2020, respectively.Finally, paragraph 4 provides that the write-off notices relating to the instalments entrusted to collection agents falling due in 2018, 2019 and 2020 shall be made by collection agents by 31 December 2023, 31 December 2024 and 31 December 2025, respectively.Tax office activitiesArticle 67 of Decree-Law No. 18/2020 suspends for the period from 8 March 2020 to 31 May 2020 certain deadlines relating to tax office activities, namely:

• deadline for control activities (with the exclusion, as specified in the Explanatory Statement, of tax settlement and formal audit activities), audit, assessment, collection and litigation;
• deadline for providing legal advice, in relation to requests for rulings submitted by taxpayers under Article 11 of Law No 212/2000 of 27 July 2000, including as a result of the submission of additional documentation (in particular, the time limit of 30 days for filing additional documentation to applications under Article 3, Legislative Decree No. 156/2015);
• deadline for replying to the request for access and the consequent request to enter the cooperative compliance regime pursuant to Article 6 of Legislative Decree No. 128 of 5 August 2015 (the so-called “cooperative compliance” regime);
• deadline related to requests for rulings on new investments, pursuant to Article 2 of Legislative Decree No. 147 of 14 September 2015;
• deadlines for accessing the enhanced cooperation and collaboration procedure, as per Article 1-bis of Legislative Decree No. 50 of 24 April 2017;
• deadline for requests for prior agreement for companies with international activities, pursuant to Article 31-ter of Presidential Decree No. 600 of 29 September 1973 (so-called “international ruling”);
• deadline for income reduction adjustment for settlements for the companies under Article 110, paragraph 7 of the Consolidated Income Tax Law, as provided for by Article 31-quater of Presidential Decree No. 600 of 29 September 1973;
• deadlines relating to the exercise of the option for the so-called “patent box” regime under Article 1, paragraphs 37 to 43 of Law No. 190 of 23 December 2014.

The periods subject to suspension shall resume from the first day of the month following the end of the period of suspension, i.e. from 1 June 2020.During the period of suspension, the filing of requests for ruling and advice mentioned above shall only be allowed by electronic means, namely, certified email, or, for non-residents who do not have an addressee in the territory of the State, ordinary email to be sent to div.contr.interpello@agenziaentrate.it.Furthermore, non-urgent and non-deferrable activities, namely, replying to requests connected with electronic searching for assets to be seized (Articles 492-bis of the Code of Civil Procedure; Articles 155-quater, 155-quinquies and 155-sexies of the Implementing Provisions of the Code of Civil Procedure) as well as in replying to requests for access to the Tax Register database, including the Archive of financial reports, authorised by Presidents or by delegated judges (Article 22, of Law No. 241 of 7 August 1990; Article 5, of Legislative Decree No. 33 of 14 March 2013) shall be suspended from 8 to 31 May 2020.According to paragraph 4, with reference to the limitation periods for the activities of the offices of tax authorities, Article 12 of Legislative Decree No. 159 of 24 September 2015 shall apply.According to the latter provision, the deadlines expiring on 31 December of the year or the suspension of payments shall be extended until 31 December of the second year following the end of the period of suspension. Based on the wording of the rule, the deadlines for assessments relating to the 2015 tax period and the 2014 tax period for omitted declarations, which expire on 31 December 2020, should be extended to 31 December 2022.Hearings and procedural activities for proceedings before the Tax CommissionsConcerning hearings and procedural activities in connection with proceedings before the Tax Commissions, Article 83 of Legislative Decree No. 18/2002 provides for the extension to 15 April 2020 of the suspension (originally set until 22 March 2020) of the procedural activities scheduled from 8 March to 15 April.Paragraph 2 provides for the suspension until 15th April 2020 of all procedural deadlines, including deadlines for service of documents instituting proceedings, enforcement proceedings, appeals and the term of 90 days after the date of submission of appeals under paragraph 2 of Article 17-bis of Legislative Decree No. 546/1992 for the right to appeal, where a complaint is mandatory pursuant to paragraph 1 of the above provision. Where the relevant time period starts to run during the suspension period, the starting date shall be postponed to 15 April 2020. Paragraph 2 also provides that where the term is counted backwards and falls fully or partially within the period of suspension, the related hearing or activity shall be postponed so that such deadline can be respected.

Tax incentives

a) Tax credits

• an increase from 2,000 to 4,000 of the maximum amounts of the tax credit that can be used by each beneficiary;
• the extension of the types of expenses that can be offset to include expenses for electricity supply services, telephone and Internet connection services, as well as newspaper home delivery services; and
• the extension of the measure to press distribution companies that supply newspapers and/or periodicals to resellers located in Municipalities with a population of less than 5,000 inhabitants and in Municipalities with a single point of sale.

b) Donations in support of the COVID-19 epidemiological emergency measures

c) Employees bonus

• In the case of donations made by individuals, it is worth mentioning the facilitation provided for by article 10, paragraph 1, letter l-quater of the Italian Tax Code, which provides for the full deductibility from taxable income for personal income tax (IRPEF) of donations made to public and private public and private hospital and care institutions (“IRCCS”) and public and private research institutions supervised by the Ministry of Education, University and Research (“MIUR”), including the Italian National Institute of Health (“ISS”).
• With regard to donations made by companies and other entities subject to corporate income tax (IRES), article 100, paragraph 2, letter a) of the Italian Tax Code provides for the deductibility from taxable income, for an amount not exceeding 2% of the declared business income, for donations made in favor of legal entities pursuing certain purposes, including scientific research and health care.
• A further tax relief commercial bodies is available under article 1, paragraph 353 of Law no. 266/2005, which provides for the full deductibility from the total taxable income of donations made to, inter alia, public and private research institutions (including the Scientific Institutes for Research and Care or “IRCCS”) supervised by the MIUR, including the ISS and recognized foundations and associations that carry out or promote scientific research activities.
• Finally, worthy of mention here is article 14 of Decree Law no. 35/2005 that provides for the deductibility, both for individuals and legal entities, within the limit of 10% of the total income and for a maximum amount of 70,000 euros per year, of donations made in favor of foundations and recognized associations whose purposes is the performance or promotion of scientific research activities.With reference to the private healthcare sector and/or individuals for whom there may be doubts about the actual entitlement to the benefit, it will therefore be necessary to assess the most suitable regulatory instrument to make the grant, considering the specific activities that are intended to support in the emergency framework related to the spread of the epidemic.

 The content of this article is for information purposes only and does not constitute professional advice.For further details please contact Paolo Rampulla. [1] Decree Law no. 18 of 17 March 2020 on "Measures to strengthen the National Health Service and economic support for families, workers and businesses connected with the epidemiological emergency by COVID-19".[2] Without claiming to be exhaustive, examples are: "Regione Lombardia"; "Fondo di mutuo soccorso - Comune di Milano"; "Ospedale Niguarda"; "Croce Rossa Italiana"; "ASST Fatebenefratelli Sacco"; Fondazione Fiera Milano"; "Protezione Civile"; "ASST Papa Giovanni XXIII - Ospedale di Bergamo" “Lazzaro Spallanzani Hospital". For the complete list please refer to the link on the website of the Ministry of Health. Among which should be considered included all the companies of the National Health Service that manage several hospital facilities. The Inland Revenue however is expected to open, at the time of conversion of the decree law or by way of interpretation through a Ministerial Circular Letter, the benefits for donations to accredited private hospitals and other parties involved in the COVID-19 emergency, which at present would not be included among the beneficiaries of the relived donations.[4] Goods and services which constitute donations in "kind" do not give rise to taxable income for the transferor.[5] While not generally cumulative.