"NEWS November 9, 2016-questioned the Irap for the" old "findings on transfer pricing"

Posted by on Nov 9, 2016

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The Commissione Tributaria Regionale della Lombardia, with judgment No. 3827 of June 28, 2016, said that the findings issued by the Inland Revenue before 2014 stability law comes into force, involving surveys on transfer pricing, have no relevance to Irap. A similar conclusion had already been previously established by the Commissione Tributaria Provinciale di Reggio Emilia, with judgment No. 510/3/14.

The issue originates from notes changes to Decree Law 244/2007 Irap, and particularly since the introduction in article 5 of the "principle of derivation of the Irap tax base from income statement of the company financial statements. Therefore, starting from the year 2008, with the entry into force of these regulatory changes, do not apply for Irap purposes the provisions of the income tax code including, therefore, could only be included also the rules on transfer pricing is contained in article 110, paragraph 7, of the tax code. And besides this effect seemed to indirectly confirmed by the approach taken by the Ministry of economy, which, following the amendments to Decree Irap effective from 2008, it considered no longer applicable the arbitration agreement (multilateral Convention of July 23, 1990 # 90/436/EEC), referred to the Elimination of double taxation arising from transfer pricing adjustments, the Irap tax assessments.

Since instead, may be lodged with the time, the tax authorities continued to extend even to the Irap disputes of transfer pricing, in order to remedy this situation, and then to include permanently in Irap measurements relating to transfer pricing, the legislator is ran for cover with the stability law 2014 in which was placed that article 110, paragraph 7, of the tax code, applies for Irap purposes "for the tax periods following that in the course of the date of 31 December 2007 ": thus, it was intended to give retroactive effect to this provision, enacted only in late 2013, so as to give importance to investigations concerning transfer pricing also for Irap purposes for the annuity.

As stated, the judgment of the CTR Lombardia has observed that for the assessment notices are issued until the entry into force of the law of stability 2014 retrospective application of survey concerning transfer pricing relevance Irap cannot be accepted, for a variety of reasons.

First, for the legitimate expectations of the taxpayer who, in the current regulatory system, could only trust in the irrelevance of Irap disputes relating to transfer pricing. The tax administration activities can be exercised only if there is a law that permits and according to the regulations in force at the time of enactment of the Tax Act, without it being possible to remedy any gaps with a new innovative standard and retroactive.

Moreover, it is not acceptable the conferring of an interpretative provision to reach stability law 2014 if, as already noted by the CTP of Reggio Emilia in the judgment in, you want to "preserve its constitutional legitimacy".

A different application would have the effect of introducing a tax provision with retroactive effect; and neither one could speak in this case of a rule of "authentic interpretation", but a norm "innovative" having effective only for the future. To be "interpretive" the standard should clarify a provision that exists, but is not "interpretation" if it has the effect of altering the status of the provisions. The case law of the Constitutional Court has always been clearly time to oppose misuse of rules cd. of "authentic interpretation" when its use hides the intention to award retroactively amending a provision and thereby substantially.

Fabio Lad

DA-PROFESS