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Italy: Cooperative compliance programme for large business taxpayers in Italy - Launch of a "Pilot Project" | Tax Connect Flash

Mandatory deadline for applications: July 31st, 2013

The Italian Revenue Agency is launching a pilot project aimed at setting an agreed upon framework in light of possible implementations of a cooperative compliance programme for Large Business Taxpayers.

Scope of the Pilot

The project aims at identifying the main features of a new form of relationship between Large Business Taxpayers and the Italian Tax Administration, so to make the current risk management monitoring activity evolving into a more advanced programme consistent with the recent recommendations by the OECD (Co-operative compliance: a framework – from enhanced relationship to co-operative compliance).

As such, the new regime implies that taxpayers shall adopt compliant behaviors based on transparency and disclosure in dealing with the Tax Administration.

The Revenue Agency, in turn, should be prepared to meet taxpayers’ needs and to resolve relevant issues in a timely and effective manner.

Therefore, the underlying purposes is intended to promote an ex ante approach rather than a traditional ex-post approach. It creates benefits in terms of taxpayers’ compliance and of providing certainty and predictability in advance.

Description of the project

The Large Business Taxpayers that will be admitted to the pilot project will engage with the Italian Revenue Agency (more specifically, with the Large Business Taxpayers Division of the Central Directorate for Tax Assessment) in ad-hoc technical tables to examine several issues jointly, e.g. features of their internal tax control framework, features of the new approach, obligations or incentives for the taxpayers, responsibilities for the Agency, and so forth.

Afterwards this testing phase is concluded and the regime is implemented through appropriate legislative measures, the taxpayer which is entered into the programme should be able to reduce fulfillments, to obtain several advantages and to take benefit, as much as possible, of advance legal certainty on specific transactions performed.

Conditions for being admitted to the Pilot Project

Based on the above, taxpayers willing to take part to the project can apply under the terms described in the following paragraph. For feasibility reasons, though, the number of participants is limited. The Italian Revenue Agency reserves the right to select the applications, based on the following requirements:

Mandatory requirements

  • being qualified as a “Large Taxpayer” (under the section 27, paragraph 10, of decree-law no. 185/2008, as converted by section 1 of law no. 2/2009), i.e. taxpayers with total turnover or operating revenues not less than 100 million/€, with reference to the tax year 2011;
  • having implemented an organizational model pursuant to section 6 of legislative Decree no. 231/2001 or having adopted a “Tax Control Framework” to manage tax risks;

Optional requirements

  • belonging to a multinational group of companies, or to carry out its business activity in Italy or abroad through permanent establishments;
  • having adopted similar cooperative compliance programmes in foreign jurisdictions or having subscribed a code of conduct with other tax administrations;
  • having already entered into initiatives falling within the concept of cooperative compliance in Italy, such as the International Tax Ruling (provided for by section 8 of decree-law no. 269 of 30 September 2003, converted with amendments into law no. 326 of 24 November 2003 and implemented with Regulation of the Director of the Revenue Agency of 23 July 2004) or having adopted the transfer pricing documentation requirements regime.

Filing of the applications

In order to allow a prompt activation of the pilot project, the interested taxpayers can file their application not later than July 31st, 2013.

The application should include:

  • a description of the aforementioned necessary/preferential requirement(s);
  • a brief explanation of the motivations for being admitted to the pilot project;
  • a brief description of the Tax Control Framework adopted, if any;
  • the references (phone number and the e-mail address) of the relevant person to be contacted by the Revenue Agency.

Our considerations The scope of the programme is still vague but might represent an interesting opportunity to liaise with the Italian tax authorities and discuss with them the major issues MNEs are encountering in their Italian operations. In this respect, CMS can help you both in packaging the documentation and in filing the application within the deadline of July 31st.