Transfer pricing year-end adjustments to be reported for DAC6 purposes

The Italian revenue agency recently issued a Resolution providing clarifications on reportable cross-border arrangements for DAC6 purposes involving transfer pricing adjustments. According to this interpretation, year-end transfer pricing adjustments made by Italian taxpayers in favour of foreign controlled entities may qualify as “reportable cross-border arrangements”. In the Italian revenue agency view, transfer pricing policy within a Group is a “legally binding arrangement” and transfer pricing year-end adjustments are actual “payments”, i.e. deductible negative items of income. Thus, under specific circumstances, transfer pricing adjustments are to be considered cross-border arrangements to be notified. While the Resolution gives additional guidance to taxpayers on how Authorities read Italian DAC6 obligations, providing some important clarifications on certain aspects never touched before, it may generate further consequences on how multinationals should consider all their intercompany transactions in certain circumstances with regards to mandatory disclosure rules.