Imagine you’re the owner of a pizza restaurant chain that operates in Italy and other countries. You want to expand your business and open new locations, but you’re also committed to paying your fair share of taxes in each country where you operate. This is where CbC reporting comes in.

CbC reporting is like making a pizza. Just like a pizza has different ingredients that come together to create a delicious meal, a CbC report has different pieces of information that come together to give tax authorities a better understanding of your business operations.

In Italy, if your pizza restaurant chain has consolidated revenue of EUR 750 million or more, you’re required to file a CbC report with the Italian Revenue Agency. This report is like the pizza crust – it forms the base of the report and provides basic information about your business, including the countries where you operate, the business activities conducted in each country, and the number of employees in each country.

The toppings on the pizza represent additional information that you need to include in the CbC report, such as your revenue, profits, taxes paid, and taxes accrued in each country. Just like the toppings on a pizza can vary depending on your personal taste, the information you need to include in your CbC report can vary depending on the country.

The cheese on the pizza is like transfer pricing. Just as cheese helps hold the toppings together on a pizza, transfer pricing rules ensure that prices charged by related parties are at arm’s length, meaning that they are similar to prices charged in transactions between unrelated parties. The CbC report provides authorities with insight into the operations of MNCs, enabling them to better understand the pricing of transactions between related parties.

By filing a complete and accurate CbC report, you’re demonstrating your commitment to transparency and fair tax practices. This is like serving a delicious pizza to your customers – they appreciate the effort and care that went into making it. Similarly, tax authorities appreciate the effort that goes into filing a complete and accurate CbC report, which helps ensure that MNCs like your pizza restaurant chain are paying their fair share of taxes in each country where they operate.

So, if you want to expand your pizza restaurant chain and operate in multiple countries, remember to file your CbC report and make sure it’s as complete and accurate as possible. Just like a good pizza, it takes time and effort to make, but the end result is worth it.

Italy implemented CbC reporting as part of its tax legislation with the enactment of Law no. 208/2015, which was later amended by Law no. 205/2017. The law requires MNCs with consolidated revenue of EUR 750 million or more (approximately USD 880 million) to file a CbC report annually with the Italian Revenue Agency.

The CbC report must be filed electronically within 12 months of the end of the fiscal year to which it relates. The first reporting period for Italy was for the fiscal year ending on or after January 1, 2016.

The CbC report must include the following information:

• Identifying information for the MNC and each constituent entity, such as name, tax ID number, and country of tax residence
• The amount of revenue, profit or loss before income tax, income tax paid, income tax accrued, number of employees, and tangible assets other than cash or cash equivalents in each country where the MNC operates
• An indication of which entity in the MNC group is responsible for filing the CbC report and the country of tax residence of that entity
• A description of the main business activities of the MNC group

In addition to the above requirements, MNCs must also comply with transfer pricing rules in Italy, which are designed to ensure that prices charged by related parties are at arm’s length.

Non-compliance with CbC reporting requirements can result in penalties, including fines and criminal sanctions. It’s important for MNCs to stay up-to-date on the latest regulations and guidelines surrounding CbC reporting in Italy to avoid potential penalties and ensure compliance.