International Taxation in Rome
Transfer pricing, permanent establishments and double taxation treaties.
In Brief
International tax in Rome: transfer pricing, permanent establishments, double taxation and the inbound workers' regime (impatriati). Marzo Associati.
Advice on Overseas Matters
We support resident and non-resident clients in navigating the complexities of cross-border taxation, preventing double taxation risks and ensuring global compliance.
Transfer Pricing:
Analysis and preparation of documentation to substantiate intra-group transfer prices.
Stabile Organizzazione:
Assessment of risks associated with the physical or digital presence of foreign businesses in Italy (and vice versa).
Expatriates:
Tax management for workers posted abroad or moving to Italy under the Italian inbound workers' tax regime (impatriati) (tax relief regimes).
Voluntary Disclosure:
Assistance with procedures to regularise capital held abroad.
International Taxation in Rome: Navigating Cross-Border Complexity
Globalisation has made international taxation a priority for a growing number of entrepreneurs, professionals and families with interests in several countries. Individual countries' tax rules overlap, creating risks of double taxation but also opportunities for legitimate tax planning. The Firm Marzo Associati provides specialist advice on every aspect of international operations.
Transfer Pricing: Protecting the Group Against Tax Challenges Worth Billions
For multinational groups, transfer pricing is the principal area of tax risk globally. The OECD has strengthened international standards through the BEPS (Base Erosion and Profit Shifting) project, implemented in Italy through increasingly stringent rules. Our Firm prepares Master File and Country File documentation in accordance with OECD guidelines, carries out benchmarking analyses using international databases and provides assistance in defending tax challenges.
Italian Inbound Workers' Tax Regime (impatriati): Making Use of Tax Relief on Returning to Italy
The Italian inbound workers' tax regime (impatriati) was rewritten byart. 5 del D.Lgs. 209/2023, applicable to those transferring their tax residence to Italy from 2024: 50% of income from work performed in Italy is taxable, up to €600,000 per year and for five tax periods, subject to requirements for high qualifications or specialisation and minimum residence commitments. The Firm assists clients intending to move to Italy with pre-relocation planning, when structural choices have the greatest tax impact.
Transfer Pricing: art. 110 c. 7 TUIR and OECD Documentation Standards
An transfer pricing is governed in Italy byart. 110, c. 7, D.P.R. 917/1986 (TUIR), which requires compliance with the principle of free competition (arm's length) in transactions between companies belonging to the same multinational group: the price charged must correspond to that which independent parties would have agreed under comparable market conditions. Documentation suitable for demonstrating that prices comply with the arm's length standard — comprising Master File (informazioni sul gruppo) e Country File (information on the individual Italian entity) in accordance with the specifications of the 2020 Order of the Italian Revenue Agency (Agenzia delle Entrate) which implemented the BEPS standards — provides access to penalty protection: in the event of an adjustment, penalties for an inaccurate tax return (70% of the tax due for infringements committed from 1 September 2024 pursuant to D.Lgs. 87/2024; 90% to 180% for earlier infringements) do not apply if the documentation was available and adequate. The documentation standards derive fromAction Plan 13 of the project BEPS (Base Erosion and Profit Shifting) of the OECD, implemented in Italy and in the legal systems of all major industrialised countries. The methods for determining the arm's length price (CUP, RPM, Cost Plus, TNMM, PSM) must be selected according to the type of transaction and the availability of reliable comparables in international databases.
Tax Residence in Italy: art. 2 TUIR and Presumptions for Moves Abroad
L'art. 2, c. 2, TUIR provides that individuals are considered tax resident in Italy if, for most of the tax period (at least 183 giorni, 184 in leap years), they are: registered in the resident population registers; or have in Italy their domicilio (main centre of interests); or their residenza within the meaning of the Civil Code (habitual abode). Meeting just one of these alternative criteria is sufficient.art. 2, c. 2-bis, TUIR introduces a significant rebuttable presumption: Italian citizens who move to countries with preferential tax regimes (included in the ministerial lists) are still presumed to be resident in Italy, with the burden of proving otherwise resting on the taxpayer. This presumption has significant consequences for those transferring their residence to Switzerland, Luxembourg, the United Arab Emirates or other countries traditionally chosen for their low taxation. Proper planning of the transfer of residence — including obtaining robust evidence that ties with Italy have been severed — is essential to avoid challenges.
International Tax Reporting: Form RW, IVAFE and Penalties
All persons resident in Italy for tax purposes who hold investments, bank accounts, shareholdings or property abroad are required to complete Form RW of their tax return and pay IVAFE (0.2% of the value of foreign financial assets) and IVIE (0.76% of the value of foreign property). Penalties for failing to complete Form RW or completing it inaccurately are among the highest in the Italian tax system: between 3% and 15% of the value of undeclared assets (doubled for countries with limited exchange of information). With the implementation of automatic exchange of information (CRS/FATCA), the Italian Revenue Agency (Agenzia delle Entrate) receives information each year on Italian residents' foreign accounts from over 100 jurisdictions. Our Firm assists with the correct completion of Form RW and with addressing past non-compliance.
CFCs, Permanent Establishments and Double Taxation Treaties
The CFC (Controlled Foreign Companies) rules require income generated by controlled foreign companies in low-tax jurisdictions to be attributed to their shareholders and taxed in Italy. Bilateral double taxation treaties — which Italy has signed with over 100 countries — provide mechanisms to avoid double taxation, but require a case-by-case analysis. The Firm Marzo Associati, based in Rome, advises clients with interests in Europe, the USA, Switzerland, the United Arab Emirates and East Asia.
Domande Frequenti — International Taxation
What is transfer pricing and when does it apply to Italian businesses?
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Transfer pricing concerns economic transactions between companies belonging to the same multinational group. The Italian Revenue Agency (Agenzia delle Entrate) may challenge the prices applied to intra-group transactions if they do not comply with the arm's length principle (art. 110 c. 7 TUIR). It applies to all Italian businesses that have dealings with foreign associated companies: sales of goods, provision of services, financing, and licensing of trade marks or patents. Without appropriate documentation, penalty protection is lost and adjustments expose the taxpayer to penalties for inaccurate tax returns, as well as interest. The Firm prepares transfer pricing documentation in accordance with OECD guidelines.
I have returned to Italy after years abroad: do I have to pay tax on all my assets?
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Not necessarily. Those transferring their tax residence to Italy from 2024 onwards may qualify for the new Italian inbound workers' tax regime (impatriati) governed by art. 5 del D.Lgs. 209/2023: 50% of employment income, income treated as employment income and self-employment income generated in Italy is included in taxable income, subject to an annual limit of €600,000 and for five tax periods, provided the requirements relating to high qualifications or specialisation, prior residence abroad and continued residence in Italy are met. Other categories of income remain taxable under the ordinary rules. Assets already held abroad remain subject to tax reporting obligations (Form RW) and IVAFE/IVIE. Our Firm assists with checking eligibility and planning the return to Italy.
What is meant by an 'undisclosed' permanent establishment of a foreign company in Italy?
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The Italian Revenue Agency (Agenzia delle Entrate) may consider a foreign company to have a permanent establishment in Italy — and therefore to be taxable in Italy — even without formal physical premises, if a dependent agent in Italy habitually concludes contracts in the name of the foreign company, or if the company's effective management is in Italy despite its registered office being abroad (agency permanent establishment). This is a growing risk with remote working and digital business models. The Firm analyses the client's operational structure and proposes solutions to mitigate the risk of a challenge.
How does voluntary disclosure work, and is it still possible to regularise my position?
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Voluntary disclosure allows taxpayers to voluntarily regularise undeclared capital and income held abroad, benefiting from penalties lower than the ordinary rates and, in some cases, exemption from criminal punishment. Extraordinary procedures are introduced periodically and are subject to specific time limits. However, even outside these extraordinary procedures, it is possible to regularise the position through the ordinary voluntary correction procedure (ravvedimento operoso). Our Firm assesses the most advantageous route on a case-by-case basis and assists with preparing all the necessary documentation.
Specialist Professionals
International Taxation — Where We Operate
Our Firm provides services in international taxation from our office in Rome to clients throughout Italy. We also assist businesses and individuals in Milan, Naples, Florence, Turin, Bologna and the main cities in Lazio.
Do you need assistance?
Our team is available for a tailored consultation.