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July 11, 2022

Italian Tax Authority issues Ministerial Circular on Mandatory Disclosure Rules

  • The Circular provides additional clarifications regarding, among others, intermediaries; tax advantage and the main benefit test; timing for communication; penalties; reporting items; and hallmarks.

  • Understanding these provisions is essential to ensuring proper reporting of cross-border arrangements under Italy’s domestic law.

Executive summary

The Italian Tax Authority published, in May 2022, the Ministerial Circular No. 12E/2022 (the Circular) on the regulation of reportable cross-border arrangements under Legislative Decree No. 100, of 30 July 2020, which transposed the European Union (EU) Directive 2018/822 of the Council of the EU (DAC6) followed by the Decree of 17 November 2020.

The Circular provides additional clarifications on different matters, the most important being (among others): (i) intermediaries; (ii) tax advantage and main benefit test; (iii) timing for communication; (iv) penalties; (v) reporting items; and (vi) hallmarks.

Detailed discussion


Italy, through Legislative Decree No. 100/2020, has implemented Council Directive (EU) 2018/822 of 25 May 2018 amending the European Union Mutual Assistance Directive (2011) as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (DAC6).

In the Ministerial Decree 17 November 2020 and Circular No. 2/E of 10 February 2021, the Italian Tax Authority (ITA) provided specific clarifications with respect to the definition of reportable cross-border arrangements, qualifying intermediaries and taxpayers required to report relevant information, possible exemptions from the reporting obligations, the application and definition of relevant hallmarks and related record keeping obligations.

In the most recent Circular, the ITA provided further clarifications on issues concerning intermediaries, the tax advantage and main benefit test, penalties for non-compliant conduct, as well as some specific hallmarks. Some of these clarifications are summarized below.

The Circular also provides further clarifications referring to hallmark D and other details, mainly applicable to financial institutions acting as intermediaries.

The Ministerial Circular is in the form of Question & Answers.


      • In order to be exempted from the reporting, the documentation to be requested from the intermediary who first made the communication, consists of a copy of the communication sent to the competent tax authority according to the XML guidelines, accompanied by the successful presentation receipt. The communication must contain all the information that the intermediary, which intends to assert the exemption, should have provided according to the provisions of the Italian Law.
      • The pro-veritate opinions as to whether a particular case is in line with the provisions and principles of the national tax legislation made at a stage prior to the implementation of the arrangement are subject to reporting if one or more hallmarks are fulfilled.

Reduction of taxes and the Main Benefit Test (MBT)

      • For the purpose of determining the potential tax reduction, it is necessary to compare the tax effects in presence of the arrangement with those that would occur in its absence. Therefore, the comparison must be made with the hypothesis where the arrangement is not implemented, without taking into consideration other alternative operations. Therefore, for example, in the case of the transfer of hard-to-value-intangibles (where hallmark E.2 is applicable), the effect of potential tax reduction must be compared with the hypothesis in which the taxpayer does not implement the transaction. For the purpose of calculating the tax reduction, withholding taxes applied on payments made to foreign entities by an Italian taxpayer may be taken into account, even if the beneficiary is resident or located in a non-Mandatory Disclosure Rules (MDR) state.
      • Within the calculation of the MBT, the extra-fiscal advantages must be considered gross of taxes.
      • The MBT, from an Italian perspective, has to be calculated only based on the formula provided by the Ministerial Decree, 17 November 2020, art. 7, Par. 2 (MBT is satisfied when the tax advantage connected to taxes relevant under the DAC6 Directive deriving from the implementation of one or more cross-border arrangements achievable by one or more taxpayers is greater than 50% of the sum of the aforesaid tax advantage and extra-fiscal advantages) without taking into consideration the guidelines provided by other EU Member States.
      • Within the MBT formula, the non-fiscal advantages, as defined in Article 1, paragraph 1, letter c) of the Ministerial Decree 17 November 2020 as “any quantifiable economic advantage of a non-fiscal nature," must be objectively determined at the moment in which the obligation of communication arises and can be proven through adequate documentation accounting or non-accounting (for example forecast financial statements, due diligence prepared in occasion of extraordinary operations etc.). Therefore, it cannot be considered a valid element for the MBT test, a mere declaration by the customer declaring the prevalence of non-fiscal advantages.

Timing for communication

In accordance with Article 7, paragraph 1, letter b), of the Legislative Decree No. 100/2020, service providers are required to notify the Italian tax authorities within 30 days starting from the day following that on which they supplied, directly or through other people, assistance or advice on the arrangement. The Circular points out that, from the wording of the provision, it is clear that the key moment for the purposes of the expiry of the terms for communication has to be identified exclusively with reference to the final act of the assistance activity. The Circular indicates that the following have to be considered as examples of key moments:

      • The issuance of an opinion in any form, as a final act of the consultancy activity.
      • The fulfillment of an act instrumental to the implementation of the arrangement, such as the structuring of a financing that is configured as a hybrid financial instrument or the transfer to the user of the equity investments in pre-established vehicle companies for the implementation of the scheme, as a final act of the assistance activity.


The Circular provides additional clarifications regarding penalties to be applied within the MDR legislation framework:

      • If a Relevant Taxpayer is part of the Cooperative Compliance regime (which promotes forms of communication and enhanced cooperation between tax authorities and taxpayers with a system of detection, measurement, management and control of tax risks), the applicable penalties are reduced by half of their amount. The penalty reduction is subject to the condition that the tax risks matrix (provided by the Cooperative Compliance regime) tracks the risks connected to MDR reporting.
      • It has been clarified that, in absence of a specific provision, if the violation of the obligation to keep documentation connected to the arrangement filed, an administrative penalty is applicable, in a range between €1,000 and €8,000.
      • When the intermediary does not communicate the cause of exemption to other intermediaries or, in the absence of the latter, to the taxpayer, penalties are not applicable. On the other hand, the Relevant Taxpayer or intermediary who does not report the arrangement, in the absence of the notification of the exemption by the intermediary, is liable to administrative penalties provided for by legislation.

Reporting items

The Circular clarifies that when several options are included in the same memorandum/opinion prepared by the Intermediary, each option has to be individually considered and each one of them constitutes a reportable cross-border arrangement subject to independent obligation of communication (even if the options are included in a single document).


The Circular provides additional clarifications on some of the hallmarks as follows:

      • As far as hallmark C.1 is concerned, an undertaking for collective investments (UCI), in general, does not qualify as an associated enterprise.
      • In the case of an intercompany agreement which regulates more business transactions, occurring during the years and put in place with the same counterpart, a single communication, indicating as value of the arrangement the annual value of the supply, has to be made. Thereafter, the Italian taxpayer will only have to indicate the reference number of the arrangement in the relevant tax returns, without any further communication, for all tax periods in which the cross-border arrangement is in place.
      • Hallmark E.2 is deemed to be met, regardless of the way through which the transfer of the hard-to-value intangible asset has been carried out (whether it consists of a transfer of the individual asset or as part of a business transfer).
      • In connection with hallmark E.3, it has been clarified that:
        • Even if no specific documentation proving the calculation of earnings before interest and taxes (EBITs) is required by the Italian law, it is necessary to provide evidence of the reliability of the data and information utilized as well as the reasonableness of the assumptions underlying the forecasts.
        • The EBITs have to be calculated in accordance with proper accounting principles.
        • EBITs calculations are the ones available at the time the reporting has to be made. Subsequent events are not relevant.


For additional information with respect to this Alert, please contact the following:

Studio Legale e Tributario (Italy), Milan

Studio Legale e Tributario (Italy), Rome

Ernst & Young LLP (United Kingdom), Italian Tax Desk, London

Ernst & Young LLP (United States), Italian Tax Desk, New York


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