The Non-Unique Notion of “Control” in Transfer Pricing – Interpretation, Legislative Developments and Problematic Aspects from an Italian and International Perspective

For their concrete implementation, transfer pricing rules necessarily presuppose a tax-relevant notion of “group”, which is built on the concept of “control” among enterprises. The current definition of “control”, under Italian tax law, is the result of a long and troubled process of refining the legislative text. Over time, the Italian tax authorities have always adopted a far-reaching interpretation of “control”, which went far beyond contractual or shareholding connections (that make relevance for the notion of “control” under the Italian Civil Code), resulting in the application of the TP rules even to cases not representing a distortion of the rules of competition, but rather reflecting situations that can be ordinarily found on the market. The notion of “control” has been finally clarified (and circumscribed) by the recent legislative developments, which – despite a number of persistent interpretative doubts – appear also more in line with the international OECD framework, which is briefly discussed in the present article as well.