The Italian Supreme Court on the deductibility of costs for intra-group services and on the concept of inherence
09-11-2021
The Supreme Court with the order of November 3, 2021, n. 31288 clarifies that the principle according to which "the burden of proof regarding the existence and inherence of the costs incurred rests with the company that claims to have received the service constitutes ius receptum, if necessary, so that the consideration paid to the parent company is deductible for the purposes of direct taxes and the concurrently paid VAT is deductible, that the subsidiary derives an effective benefit from the remunerated service and that the latter can be objectively determined and adequately documented ".
This ruling concerns the matter of costs so-called intragroup in the event that the parent company of a group of companies decides to provide services or directly take care of the activities of common interest to the companies of that group, sharing the costs among them, in order to coordinate the operational choices of the formally autonomous companies and reduce management costs through forms of economy of scale.
The 6th Civil Chamber of the Court therefore stated that this deductibility is subject to the effectiveness and inherence of the expenditure in relation to the business activity carried out by the subsidiary, as well as to the real advantage deriving from it, on which the burden of specific allegation of the elements necessary to determine the actual or potential usefulness of the costs incurred to obtain the services provided by the parent company.
On the issue of the probative effectiveness of documents filed by the taxpayer, the Supreme Court explained that the presentation of a contract concerning the provision of services provided by the parent company to the subsidiaries or the invoicing of the fees, with the obligation of the taxpayer to indicate and specify the elements necessary to determine the actual or potential utility achieved by the affiliate receiving the service, also based on the fee for the proximity of the test.
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