Italy Tax Agency Clarifies Deductibility of Expenses for Data Transfer Services

The Italian Revenue Agency March 9 issued Letter No. 71/2026, clarifying the deductibility of expenses for data transfer services. The taxpayer, a limited liability company providing information technology (IT) infrastructure, cybersecurity, application, and procurement services through its head office and international permanent establishments (PEs), sought clarification on whether the portion of landline, mobile, and data transfer costs used exclusively to serve international group customers could be fully deducted rather than being subject to the 80 percent limitation. Upon review, the Tax Agency clarified that: 1) only telephone service costs directly and exclusively tied to revenue generating business activities are fully ...