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Tax News

On 12 March 2019, the Ecofin Council updated the blacklist of tax havens, i.e. Countries and jurisdictions outside the EU that, according to the European Commission are not compliant from a fiscal point of view.

The updated list currently includes 15 jurisdictions, 10 of which added with the last amendment in addition to the 5 already present. These are jurisdictions which failed to implement the commitments taken on with the European Union as regards tax policies and which will therefore be subject to a specific focus by EU and national authorities.

The new Countries included in the list by the European Commission and approved by 28 member States are Aruba, Barbados, Belize, Bermuda, Dominica, Fiji, Marshall Islands, Oman, Vanuatu and the United Arab Emirates (despite the objections of Italy and Estonia). These add up to American Samoa, Samoa, Guam, US Virgin Islands and Trinidad & Tobago.

Transfer Pricing

With judgements n. 28337/2018 and n. 28338/2018 the Italian Court of Cassation dealt with the methods used to determine arm’s length transfer prices and in particular with the ex post normalisation of said prices in transaction between Italian and foreign entities belonging to the same group.

The judges analysed in particular the topic of legitimacy of year-end adjustments on intercompany prices - originally established basing on estimates - to align them to the arm’s length value. Basing on the judges’ indications, multinational enterprises will have to evaluate the arm’s length compliance of transfer prices before making any adjustment, thus making ex post amendments irrelevant, even in case a difference between the prices actually applied in the FY and the arm’s length value is identified through an ex post check.

Patent Box

The Italian Revenue Office published law principle n. 11 dated 22 March 2019 concerning the exercise of the patent box option for trademarks during the grandfathering period. In particular, taxpayers who had already applied to access the patent box procedure in the first two FYs in which it was in force have the possibility to exempt them from taxes by 30 June 2021.

The Italian Revenue Office examined the case of a taxpayer who in 2015 opted for the patent box option without applying for the compulsory ruling. The taxpayer filed the application to access the procedure to determine the portion of income referable to exempt assets only on December 31, 2018, recalling the option filed in 2015. Since trademarks have meanwhile been excluded from exempt intangible assets, the possibility to access the patent box regime was uncertain.

The Revenue Office, with its opinion, specified that, on the one hand, trademarks can be included in the regime, with priority basing on the filing date (i.e. 2015) and, on the other hand, the deadline for the application of the tax exemption introduced in 2018 will be without exceptions June 30, 2021.