Prepared by Transfer Pricing Team
With Circular Letter n.7/E, the Italian Revenue Agency returns to deal with the suspension of terms affecting the activities of tax offices, pursuant to article 67, paragraph 1, of the Law Decree n. 18 of 17 March 2020 (the so-called “Cura Italia” decree), which provided for, due to the emergency situation, the suspension of the activity of the tax offices, freezing the relative terms for a period of 85 days, starting from 8 March 2020 until May 31, 2020. The activities will resume starting from June 1, 2020.
More in details, through such Circular, the Revenue Agency illustrated the effects of this suspension with reference to the procedures concerning: (i) the advance agreements for companies with international activity referred to in art. 31-ter of the Presidential Decree September 29, 1973, n. 600 (the so-called “Advance Pricing Agreement” or “APA“) which includes, inter alia, agreements related to transfer prices, (ii) the corresponding adjustments pursuant to art. 31-quarter, lett. c), of the Presidential Decree September 29, 1973, n. 600, as well as (iii) the agreements concerning the use of intangible assets pursuant to art. 1, paragraphs from 37 to 43, of the law of 23 December 2014, n. 190 (so-called “Patent Box” regime).
Although these are not binding terms, whose non-compliance, therefore, does not produce any direct effects, it is appropriate to highlight some consequences that certainly derive indirectly from this suspension.
Firstly, with reference to the requests already started, the 30-days term granted to the tax office to declare the admissibility, inadmissibility or the non-possibility to proceed for APA procedures requests, as well for requests as for art. 31-quater lett. c) of the Presidential Decree September 29, 1973, n. 600, is suspended until June 1, 2020. The same logics also apply with regard to the Patent Box, as concerns the suspension of the 120-days term granted to the taxpayer for filing the supplementary documentation to the application.
It is also clarified that, during the suspension period, the submission of new applications for APA and Patent Box is allowed, but such requests are to be presented exclusively electronically through the use of certified e-mail or, in case of foreign residents without domicile in the territory of the State, by sending it to the ordinary mailbox of the competent tax office. The terms for the tax office to provide a response in relation to these new requests (e.g. regarding admissibility), pursuant to the Provision of the Director of the Revenue Agency no. Prot. No. 2016/42295, start from 1 June 2020.
Specific instructions are provided regarding the effects of article 67 in case of taxpayers with the exercise at the turn of the year and the closure of the tax period during the suspension period (e.g. March 31). In this regard, it is clarified that it will be possible to obtain the recognition of the effects (so-called rollback) of the APA (unilateral or bilateral) also for said closing tax period, since although the application was presented after the closure of the tax period, such submission took place during the suspension period. By way of example, the Circular considers the case of a taxpayer with a tax period from April 1 to March 31 and who benefits from a suspension period between 8 and 31 March (twenty-four days). In the example at hand, the taxpayer may submit an application for access to the procedure by June 24, by obtaining recognition of the effects of the agreement, differently in relation to the unilateral or bilateral nature of the agreement, for the tax period April 1, 2019 – March 31, 2020.
Furthermore, in the event of a taxpayer closing the tax period within the suspension period, if the unilateral agreement procedure has reached the final phase of the investigation already before the suspension period, the agreement signed within eighty-five days (timing of the suspension period) from the end of the suspension period (therefore starting from June 1, 2020), must be considered effective starting from the tax period that ended during the period March 8 – May 31, 2020. In this respect, it is clarified that the procedure is considered to have reached the final stage when, for example, there has been an agreed access and / or a view sharing between the competent tax office and the taxpayer with reference the most appropriate transfer pricing method for the case, including the potential benchmark analysis.
The Circular contains practical indications for the tax offices which, in the suspension period, will be able to perform the activities typically connected with the processing of the requests, allowing both the Revenue Agency and the taxpayer to provide the answers or perform the acts envisaged by the specific procedure, without that this generally entails the waiver of the benefits of the suspension of the terms provided for in article 67. It is also possible to continue the dialogue between taxpayers and the competent tax offices, with a view to collaboration and good faith.
However, in consideration of the priority need to protect employees and citizens health, it is expressly provided, through the use of tele / videoconferencing tools, to conduct the meeting “remotely”, as well as through the use of certified e-mail (or also possibly standard e-mail) for the identification of the taxpayer or his representative (with the attachment of an identity document), for the exchange of attachments as well as the minute of the meeting (both drafts and the final version with the protocol number ) to be signed by both parties, also with the use of digital signature. It should be noted that this remote procedure may also be used to sign the same advance agreement reached at the end of the procedure.
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