Guidance by the tax authorities (Guardia di Finanza) and recent decisions by Italian courts have examined and clarified the definition of permanent establishment following amendments made by the budget law of 2018.
Guidance from the Guardia di Finanza (annex 2 to notice no. 114153/2018 (13 April 2018)) clarifies:
Another notice from the Guardia di Finanza provides guidelines on how to address “hidden PEs”—that is, those “hidden” within a subsidiary belonging to a multinational group.
The Supreme Court of Italy issued judgments finding:
The regional tax court of Milan issued a judgment concluding that there was no agency PE hidden within the Italian entity. The case involved a software company that was a resident in Italy and that provided sales support to a UK resident company (not belonging to the same corporate group as the Italian company). The work performed by the employees of the Italian entity for the UK company was considered to be merely preparatory and auxiliary.
Read a May 2018 report [PDF 192 KB] prepared by the KPMG member firm in Italy
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