Italy vs Computer Associates SPA, February 2013, Supreme Court no 4927

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Category: Burden of Proof, Royalty and License Payments | Tag: , , , , , , , , , ,
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The Italian tax authorities had challenged the inter-company royalty paid by Computer Associates SPA, 30% as per contract, to it’s American parent company, registered in Delaware.

According to the authorities a royalty of 7% percentage was determined to be at arm’s length and an assessment for FY 1999 was issued, where deduction of the difference in royalty payments was disallowed.

The tax authorities noted the advantage for group to reduce the income of Computer Associates SPA, increasing, as a result, that of the parent company, due to the much lower taxation to which the income is subject in the US state of Delaware, where the latter operates (taxation at 36% in Italy, and 8.7% in the State of Delaware).

The Supreme Court dismissed the appeal of Computer Associates SPA and concluded that the assessment was in compliance with the law.

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Italy Supreme-Court-27-February-2013-No.-4927.pdf

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