CNH Industrial and its Italian subsidiary FPT Industrial faced transfer pricing adjustments for 2013 and 2014 after tax authorities found intercompany transactions undocumented and not proven arm's length. Lower courts overturned the assessments citing materiality thresholds and market circumstances. Italy's Supreme Court reversed those decisions in 2025, finding the reasoning inadequate and affirming that simplified documentation relief cannot override the fundamental obligation to apply arm's length pricing ... Read more

Not all transactions that occur between associated enterprises are sufficiently material to require full documentation in the local file. Tax administrations have an interest in seeing the most important information while at the same time they also have an interest in seeing that MNE groups are not so overwhelmed with compliance demands that they fail to consider and document the most important items. Thus, jurisdictional transfer pricing documentation requirements based on Annex II to Chapter V of these Guidelines should include specific materiality thresholds that take into account the size and the nature of the local economy, the importance of the MNE group in that economy, and the size and nature of local operating entities, in addition to the overall size and nature of the MNE group. Measures of materiality may be considered in relative terms (e.g. transactions not exceeding a percentage of revenue or a percentage of cost measure) or in absolute amount terms (e.g. transactions not exceeding a ... Read more