The Profit Split Method across Jurisdictions – Report on Italy

This article examines the transactional profit split method (PSM) in the Italian transfer pricing framework. After addressing the limited domestic rules and the resulting reliance on the OECD Transfer Pricing Guidelines, it analyses two decisions: Supreme Court order No. 11837 (18 June 2020) and Tax Court of Lombardy judgment No. 1059 (22 April 2025). The former treats significant asymmetries in intra-group cost structures as a warning sign of the PSM’s potential unreliability; the latter restricts the application of the PSM to genuine functional integration and unique and valuable contributions instances. Together, they confirm that Italian courts embrace the OECD framework as the main interpretative reference.This article is part of a special issue of the International Transfer Pricing Journal on the application of the PSM across jurisdictions. The other articles include the General Report and contributions on Belgium, France, Germany, Ireland, Korea, the Netherlands, Portugal, Spain and the United States.