Top Italian Court Backs Company’s Intragroup Profit Markup

A top Italian court ruled a company can use businesses with negative operating results to test the arm’s-length nature of a profit markup between related parties.

The Corte Suprema di Cassazione granted an appeal from Convergys Italy s.r.l, previously Stream Italy s.r.l., against a 2012 increase of a 5% profit markup the company charged on call center services to a related entity in the Netherlands.

The ruling, dated July 16 and published over the weekend, returns the case to Corte di Giustizia Tributaria di secondo grado della Lombardia (Second Degree Tax Court of Justice of Lombardy) for a ...