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On 12 September 2024, the Italian Government published (in the Official Gazette No. 214) the Legislative Decree (Decree) enacting Public Country-by-Country Reporting (PCbCR) legislation in Italy, requiring large multinational entities (MNEs) to publicly divulge income-tax-related information for each Member State jurisdiction, as well as for jurisdictions included in the European Union list of noncooperative jurisdictions. Data regarding other jurisdictions may also be included.

The obligations introduced by the Decree shall apply to financial statements relating to financial years beginning on or after 22 June 2024.

Overview

The reporting obligations introduced by the Decree apply to: (i) Italian parents of groups with consolidated revenue exceeding €750m for each of the last two consecutive financial years; (ii) Italian companies that exceed the revenue threshold on a stand-alone basis; (iii) Italian companies that do not exceed the revenue threshold but belong to consolidated groups not established in a Member State that does meet the threshold; and, under certain circumstances (iv) Italian permanent establishments. (For more detail, see EY Global Tax Alert, Italy issues draft Public CbCR decree, dated 17 June 2024,which also provides some insights on the set of information (Report) to be disclosed.)

The Report, including the set of information required, needs to be filed with the Company Registrar not later than 12 months from the end of the relevant financial year. The filing shall contain a confirmation that the Report has also been published on the company's website. The Report is to be filed in Italian or in a language commonly used in the context of international finance and must remain available for public consultation for five years.

Exclusions from the reporting obligation apply for:

• Companies that are already subject to reporting obligations according to the so-called "unified body of laws on banking and credit matters"
• Companies that operate solely in one Member State jurisdiction
• Companies that are part of a Group whose ultimate parent is established in a jurisdiction, other than a Member State, applying comparable disclosure obligations (subject to certain requirements and fulfillments)

Directors of Reporting Entities failing to comply with the relevant obligations (either by not respecting the relevant deadline or by neglecting to include relevant data) are subject to administrative penalties ranging from €10,000 to €50,000. Under certain circumstances, these penalties may be halved or doubled.

Outlook

The introduction of the PCbCR obligations in Italy is expected to increase compliance and data collection obligations and responsibilities for affected MNEs.

These heightened compliance requirements underscore the urgent need for in-scope entities and MNEs to verify that they possess the necessary data points and to refine their CbCR compliance processes in response to the latest regulatory developments.

To effectively manage this new reporting obligation and explore opportunities for mitigating its impact, it will be important for in-scope organizations and MNEs to assess their internal processes and closely monitor the domestic implementing provisions, as well as any official interpretations that the Italian Tax Authorities may issue.