Italy vs Christian Fishbacher S.p.A, May 2019, Corte di Cassazione No 9615 Anno 2019

According to the Tax Authorities, the content of Christian Fishbacher S.p.A’s contract with the Swiss parent of the Group, granting limited right of use of the trademark, did not justify a royalty of 3.5%, to which an additional 1.6% was added as a contribution to the investments for the promotion and development of the brand.

The appellate judge held that exceeding the values taken as “normal” by the circular 32 of 09/22/1980 not it were justified in the light of the concrete elements of the case is that correctly the Office had re-determined the value of the services within 2%, following the aforementioned Circular, which incorporated the indications of the report drawn up by the OECD in 1979.

The circular identifies three levels for assessing the normal value of royalties: the first, not suspected, up to 2%; the second from 2% to 5%, determined on the basis of technical data firm and to the content of the contract , in particular reference usefulness of the licensee; the third over 5% for exceptional cases, justified by the high technological level of the reference economic sector .

The decision of the CTR does not appear to conflict with the art. 110, paragraph 7, Tuir . (nor with the Articles 39 and 40 Presidential Decree no.600/73), as the appellate judge held that subsist a series of elements which jointly considered competed to to form a painting circumstantial suitable to ascertain the ascertainment of the Office pursuant to Article 110 , paragraph 7 ; moreover it has assumed the percentages indicated in the circular n.32/1980 as objective parameter for the determination of the “normal value”, in the absence of evidence contrary or different provided by the tax payer.

The solution adopted is in line with the principle, regarding the assessment of income taxes, according to which the burden of proof of the assumptions of the deductible costs and charges, competing to determine the business income, including their inherence and their direct attribution to revenue-generating activities lies with the tax payer (see Cass. 02/25/2010, n. 4554; Cass. 30/07/2002, n. 11240).

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Ita vs Royalty NO 9615 2019 05-04-2019

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