Simone Zucchetti and Giulio Tombesi are the authors of the article “The Long-Awaited Circular Letter on Italian Transfer Pricing Documentation: Critical Analysis and Practical Implications”, which has been published in the International Transfer Pricing Journal edited by IBFD.

The article addresses, with a critical approach, the main clarifications provided – and not – by the Revenue Agency with the recent Circular Letter No. 15 of 26 November 2021, regarding the correct fulfillment of Transfer Pricing (TP) documentation requirements. Such TP documentation requirements (i.e., Country file and Master file), if deemed compliant with the operational instructions outlined in the Provision of 23 November 2020 by the Revenue Agency Director, will grant the taxpayer the right to benefit from the penalty protection regime against the application of sanctions in case of a tax audit by the authorities.

The authors comment on the main issues set out in the Circular Letter by making reference to the content of TP documentation and to the procedure for notifying its possession. Furthermore, the article analyses more in-depth certain issues that have yet to be clarified such as the failure to “abrogate” previous instructions that have now been de facto superseded (for example, those relating to the “safe harbor” for royalties), the protection against not only administrative but also criminal penalties, the relevant implications of the recharacterization of transactions and the implications of TP documentation in the context of Advance Pricing Agreement.