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Italy – Italian Transfer Pricing Provisions (TNMM Application) - Decision No. 15668/2022

Updated: Oct 17, 2023

Promgas s.p.a., a company equally owned by Italian Eni s.p.a. and Russian Gazprom Export, engages in buying and selling Russian-origin natural gas for the Italian market. It has an exclusive contract, dated 24 January 2000, to sell this gas to Edison spa, an Italian entity outside of the group. Essentially, Promgas s.p.a. acts as an intermediary between Gazprom Export, the Russian gas exporter, and Edison s.p.a., the Italian end buyer of the gas.


A tax audit for the fiscal year 2005/06 found discrepancies in Promgas's operating margin, recorded at 0.23% in 2025 and 0.06% in 2006. The tax authorities determined that these figures were inconsistent with what the company might have earned at arm's length. By applying an operating margin of 1.39%, they calculated an arm's length profit of €4,227,438.07 for the year 2005. This figure was €3,426,803.00 more than what the company had declared as profit.


Promgas s.p.a. appealed against the notice of assessment, which was upheld by the Provincial Tax Commission of Milan, with sentence no. 356/44/11, notified on 23/12/2011. The tax authorities then filed an appeal with the Regional Tax Commission of Lombardy which upheld the the tax authorities main appeal and rejected the company’s cross appeal. Promgas s.p.a. then filed an appeal with the Supreme Court. The Supreme Court remanded the cast to the Regional Tax Commission of Lombardy and held that the TNMM application is reliable.

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