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For the first time in Italy companies must prepare the necessary documentation supporting the transfer pricing policy adopted. The ruling identifies two types of documentation:
• the masterfile
• domestic documentation

This documentation, supplied during a scheduled check or during a financial investigation, allows the taxpayer the non application of penalties as specified in Article. 1, paragraph 2 ter of Legislative Decree 18 December 1997, n. 471. It is in line with the Code of Conduct in the European Community documentation on transfer pricing (the so-called “EU Transfer Pricing Documentation) which must be applied to transactions between group entities resident in the EU, as well as the transactions of subsidiaries of EU companies and group entities located in countries outside the EU. 

The documents required are the master file and the country file. The master file shows the true economic state of the company and provides a picture of the multinational and its system for setting transfer prices which is accessible to all member states concerned. More than one master file is permitted if the group is involved in different sectors of activity (or business lines) which are covered by specific transfer pricing policies.
Under the ruling, the documentation must be:
• prepared annually, the only exception being for small and medium enterprises, which don't need to update the data for the  analysis of comparability for the two years following the year of preparation of documentation
• written in Italian, but which allows the master file to be set up in English
• initialed on each page by the legal representative or his delegate, and signed on the last page, even electronically
• delivered to the Revenue Agent within ten days of the request
• provided in electronic format, if only hard copies are available, the taxpayer has the option, within a reasonable time to prepare documentation in electronic form, subject to the non-application of sanctions. 
The information contained in the documentation must be true. Sanctions may be imposed if documents are incomplete, do not conform to the minimum content laid down, or do not correspond to reality.
To reassure the taxpayer it is expected that the information contained in the documentation cannot be used for "purposes other than those directly necessitated in the course of an institutional check.

LDP Services for Transfer Pricing

• identification of benchmarks
• review of the business supply chain
• preparation of a set  that contains information common to all group companies in the EU (masterfile);
• obtaining more information regarding each set in a single country ("country file")
• management of transfer pricing and Renenue Agent 
• management of risk analysis related to transfer pricing
• study of the tax impact of transfer pricing policy Logo

LDP provides services for Multinational Companies that wish to invest in Italy. Our Clients come from all over the world and including some listed companies. Our quick roll out involves not only company formation but also the setting up of an accounting system, a reporting package, payroll and legal services, immigration, social security management, contracts of employment and transfer price compliance. This is the easiest and most correct way to do business in Italy. LDP services allow our clients to focus on developing their business in Italy thus saving time and money. Our One-point-of-Contact business model effectively and efficiently matches your requirements with tailor-made solutions, saving you valuable time and resources. LDP have a special focus also in M.&A. in particularly in providing assistance for data room, due diligence, drafting of S.P.A. and assistance during the negotiation phase. LDP will support you on every step to making business in Italy.

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