Italy v. Kulch & Eco Leather

This chapter examines Italian Supreme Court Decision No. 1311 of 2025 on transfer pricing, tracing the development of domestic legislation and the Court’s differing interpretations of the methods used to determine intra-group prices. It contrasts an approach that treats the comparable uncontrolled price (CUP) method as preferred, though not exclusive, with one that interprets domestic law in line with Article 9 of the OECD Model Tax Convention and the OECD Transfer Pricing Guidelines. While recognising the policy rationale for aligning Italian law with international standards, the chapter identifies significant concerns in the Court’s reasoning: in particular, its failure to consider the applicable tax treaty and the potential retrospective application of the OECD Guidelines, which may affect the principles of legality and legal certainty