Transfer Pricing adjustments are not relevant for the crime of unfaithful tax return
Transfer pricing adjustments do not amount to the crime of unfaithful tax return: this is one of the clarifications given by the Italian Finance Police.
Article 4 of the Legislative Decree no. 74/2000, after the changes occurred thanks to the Legislative Decree no. 158/2015, states that the crime of unfaithful tax return occurs when, in order to evade income taxes or VAT, assets with a value lower than the effective one or nonexistent costs are included in one of the annual income tax or VAT return, if jointly: i) the evaded tax is higher than 150.000 euro (each evaded tax); ii) the total amount of the assets for which the related taxation has been avoided, even throughout the indication of nonexistent costs, is higher than 10% of the total amount of the assets included in the return or, anyway, higher than 3 million euro.
The new provision of the aforementioned article expressly refers to “nonexistent costs” (and no more to “unreal costs”). For this reason, considering the purely estimative nature of transfer pricing adjustments, they cannot be relevant for the crime of unfaithful tax return. However, these corrections can give rise to the crime of fraudulent tax return by means of other artifices (Article 3 of Legislative Decree No. 74/2000).
Nevertheless, it should be noted that intercompany transactions aimed at tax saving could result in an alteration of the company’s operating results, determined by the indication of lower revenues compared to those actually achieved or higher costs, generally going to affect the structure of the crimes of “false social communications”.