Key Points
- Selling below market price, or buying above it, is no longer sufficient to trigger an adjustment for income tax and IRAP purposes.
- Further serious, precise and consistent circumstantial evidence is required, with a single exception: a "manifest and significant" discrepancy.
- The rule is contained in Article 24 of dlgs n. 148 of 7 August 2026, published in the Ordinary Supplement to Gazzetta Ufficiale No. 185 of 11 August.
- The departure remains a "symptomatic indicator" of higher income items or of an expense item's lack of connection with the business, not a rule for determining income.
- VAT remains outside the scope of the provision, which is limited to income taxes and IRAP: the same departure in the same transaction may be assessed against different standards.
Selling below market price, or buying above it, is no longer sufficient to trigger an adjustment. For income tax and IRAP purposes, a discrepancy between the agreed consideration and the market value of the goods or services exchanged may justify an assessment only if accompanied by further serious, precise and consistent circumstantial evidence, with a single exception: where the discrepancy is "manifest and significant".
This is provided for in Article 24 of the Omnibus corrective legislative decree implementing the delegated powers for tax reform under legge 111/2023, dlgs n. 148 of 7 August 2026, published in the Ordinary Supplement to Gazzetta Ufficiale No. 185 of 11 August: the provision codifies scrutiny of commercial irrationality, hitherto developed through case law.
Commercial irrationality: challenges before and after
| Aspect | Current framework | Corrective decree (Art. 24) |
| --- | --- | --- |
| Source of the rule | Case law on scrutiny of commercial irrationality | Statutory provision implementing the delegated powers for tax reform (legge n. 111/2023) |
| Relevance of a departure from market value | "Merely circumstantial indicator" (Italian Supreme Court (Corte di Cassazione), No. 16948/2019); under the stricter line of authority, a glaring discrepancy is sufficient to reverse the burden of proof (Italian Supreme Court (Corte di Cassazione), No. 10420/2023 and order No. 2777/2026) | "Symptomatic indicator": the adjustment requires further serious, precise and consistent circumstantial evidence |
| Exception | No provision | The departure is sufficient on its own if the discrepancy is "manifest and significant" (concepts without quantitative thresholds) |
| Taxes concerned | Commercial irrationality is also relevant for VAT purposes, if manifest and glaring (Italian Supreme Court (Corte di Cassazione), No. 10420/2023; order No. 19073/2026) | Income taxes and IRAP; VAT outside the scope of the provision |
| Consolidated legislation | No provision | Provision replicated in Art. 252-bis of the Consolidated Act on Tax Compliance and Assessment (from 1 January 2027) |
| Effective date | No provision | No transitional rules; the question of pending proceedings remains open |
The new provision
The provision classifies a departure from market values as a mere "symptomatic indicator" of the existence of a higher income item or of an expense item's "lack of connection with the business": to support the adjustment, "further circumstantial evidence" is required which, "assessed also together with that discrepancy", must be "serious, precise and consistent". The sole exception: where the discrepancy "is manifest and significant", the departure is sufficient on its own. The rule covers both sides of an assessment: revenue considered too low and costs considered excessive.
Where the problem originates
Over the years, tax offices have often turned a departure from normal value into a rule for determining income, challenging sales below cost, domestic intra-group prices (so-called domestic transfer pricing), fees and rents outside market levels, despite Article 5, paragraph 2, of dlgs 147/2015 having clarified, by way of authentic interpretation, that Article 110, paragraph 7, of the Italian Income Tax Code (TUIR) does not apply to transactions between resident enterprises.
The framework was established by the leading judgment of the Italian Supreme Court (Corte di Cassazione), No. 16948/2019, on two levels. As regards tax avoidance, domestic transfer pricing has no place in the legal system, and a departure from market price is "only an additional element, potentially confirming" an avoidance arrangement already "complete in all its elements" (principles reproduced verbatim by the Italian Supreme Court (Corte di Cassazione), No. 5859/2024 and order No. 8582/2025, and applied by order No. 24856/2021). As regards assessments, commercial irrationality remains a valid basis for an analytical-inductive adjustment under Article 39, paragraph 1, letter d), of dpr 600/1973: disproportionate costs operate as a "symptomatic indicator of a lack of connection with the business", excessively low revenue as an indication of concealed consideration, and the departure is relevant "as a merely circumstantial indicator"; but for complex or group transactions, a challenge cannot be reduced to "disagreement with the choice", and must establish, "on the basis of objective elements", that the transaction is unreliable.
Divergence in application
Applications differ as to the extent of the burden of proof. According to the Italian Supreme Court (Corte di Cassazione), No. 10420/2023, followed by order No. 2777/2026, the departure "may be relevant as a merely circumstantial indicator of the transaction's manifest and glaring commercial irrationality", being sufficient on its own to shift the burden of proof to the taxpayer; conversely, order No. 19073/2026 upheld the annulment of an adjustment where the economic justifications for the costs stood up to scrutiny, describing incongruity and commercial irrationality as "symptomatic indicators of a lack of connection with the business, without being identical to it".
The provision's centre of gravity
The key word is "only". The departure, whatever its extent, is no longer sufficient on its own: the assessment must identify further circumstantial evidence, to be assessed also in combination with the discrepancy, meeting the standard of seriousness, precision and consistency. A comparison with price lists, expert valuations or databases alone, without more, will no longer suffice.
The process begins with the prior hearing
The new standard will have an impact even before the notice: under the general prior-hearing requirement in Article 6-bis of the Taxpayers' Charter, the further circumstantial evidence must appear in the draft assessment, at which stage the taxpayer may document the economic reasons for the departure, which the tax office must take into account in its statement of reasons.
Market value: a concept to handle carefully
As regards "market value", the reference remains the normal value under Article 9 of TUIR, based on the prices generally charged for similar goods and services under conditions of free competition, price lists and tariffs: where there are no homogeneous comparables, as with unique assets or unlisted shareholdings, it will be difficult to describe the discrepancy as manifest.
The safety valve of undefined concepts
The exception rests on two adjectives, a "manifest and significant" discrepancy, without percentage thresholds or quantitative parameters: determining where normal variation ends and significance begins will remain a case-specific question, with the risk of shifting litigation from the rule to its exception.
Administrative guidance may assist: Article 25 of the same decree strengthens the link between policy directives issued by the Ministry of Economy and Finance and circulars issued by the Italian Revenue Agency (Agenzia delle Entrate), the natural setting for uniform application criteria.
Commercial irrationality and abuse: distinct issues
The rule governs proof of facts, namely concealed revenue or costs lacking a connection with the business; abuse of rights under Article 10-bis of the Taxpayers' Charter is a different matter, presupposing genuine transactions which lack economic substance and are aimed at obtaining undue tax advantages, with its own independent procedural safeguards: these perspectives cannot be conflated in assessments, with implications for burdens of proof and defence strategies.
VAT remains outside the scope
The scope is limited to income taxes and IRAP. Yet case law has recognised the relevance of commercial irrationality for VAT purposes too, within the limits of a manifest and glaring discrepancy, as an indication that the transaction is not genuine or that the cost lacks a connection with the business (Italian Supreme Court (Corte di Cassazione), No. 10420/2023 and order No. 19073/2026). Accordingly, the same departure in the same transaction may be assessed against different standards for direct tax and VAT purposes: coordination can come only from future legislation or clarifications in administrative guidance.
Consolidated legislation and pending disputes
The provision is replicated word for word in Article 252-bis of the new Consolidated Act on Tax Compliance and Assessment, applicable from 1 January 2027; it is neither designated as an authentic interpretation (a designation used instead in Article 7, on loss carry-forwards) nor accompanied by transitional rules. But the terminology reveals its origins: "symptomatic indicator", "lack of connection with the business", circumstantial evidence and manifest discrepancy are taken directly from the case law just discussed.
There is, however, one difference in taxpayers' favour: where the stricter line of authority allowed a glaring discrepancy alone to justify an assessment, the provision generally requires further circumstantial evidence. In pending proceedings, the twofold argument will be this: continuity of the underlying conditions, stronger safeguards.
Frequently Asked Questions
Is a departure from market value still sufficient for an assessment?
No. For income tax and IRAP purposes, a discrepancy between the agreed consideration and market value may justify an assessment only if accompanied by further serious, precise and consistent circumstantial evidence, except where the discrepancy is "manifest and significant".
Which provision codifies scrutiny of commercial irrationality?
Article 24 of the Omnibus corrective legislative decree, dlgs n. 148 of 7 August 2026, published in the Ordinary Supplement to Gazzetta Ufficiale No. 185 of 11 August, implementing the delegated powers for tax reform under legge 111/2023.
Does the rule also apply for VAT purposes?
No: the scope of the provision is limited to income taxes and IRAP. However, case law has recognised the relevance of commercial irrationality for VAT purposes too, within the limits of a manifest and glaring discrepancy, so different standards may coexist for the same transaction.
What does a "manifest and significant" discrepancy mean?
It is the sole exception provided for by the provision, resting on two adjectives without percentage thresholds or quantitative parameters: determining where normal variation ends and significance begins will remain a case-specific question.
When is it advisable to document the economic reasons for the departure?
As early as the general prior-hearing stage under Article 6-bis of the Taxpayers' Charter: the further circumstantial evidence must appear in the draft assessment, and the tax office must take into account in its statement of reasons the economic justifications submitted by the taxpayer.
Giancarlo Marzo — Marzo Associati, the law and tax Firm. Article published in ItaliaOggi Sette on 24 August 2026.
