Tax overview
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Group approach to Tax
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Pirelli’s Global Tax Policy defines the Group approach to tax.
The Global Tax Policy was approved in 2018 by the Board of Directors of Pirelli & C. S.p.A..
The Board of Directors of Pirelli & C. S.p.A. is responsible for reviewing, updating and approving the Group’s Global Tax Policy whenever deemed appropriate or necessary.
Pirelli’s Ethical Code and Global Tax Policy define the set of values and principles underlying the Group’s behavior when dealing with tax risks.
Pirelli Group entities follow the guidelines provided by the Global Tax Policy in order to guarantee the integrity and reputation of the Group over time when conducting business affairs and managing tax risks.
Thanks to its Global Tax Policy, the Group ensures to be compliant with both domestic and international tax regulations and with the OECD guidelines, avoiding aggressive tax planning and results that are not aligned with the economic substance of its business. In this regard, the Group commits not to transfer value created to low tax jurisdictions and it takes reasonable steps to be compliant with both the letter and the spirit of the tax laws.
For further information, please refer to Global Tax Policy.
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Tax governance, control and management tax risks
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The Group approach and management of tax risks is defined by the Board of Directors of Pirelli & C. S.p.A. that is regularly informed through the Audit, Risk, Sustainability and Corporate Governance Committee on the tax risks identified in the Group’s business activities and mitigation actions undertaken.
In addition, starting from 2017, the two larger companies in Italy, location of the Group’s headquarter, have adopted a Tax Control Framework (TCF) in line with the best international practices and compliant with the OECD-based Principles. The TCF is a system of detection, management and control of tax risks, based on rules, principles and processes that confirm the Group’s commitment to compliance with tax regulations. The system is required by the Board of Directors.
The solidity of Pirelli’s TCF was endorsed by the Italian Revenue Agency and certified with the admission of Pirelli from 2017 to the "Cooperative Compliance Regime”. This new mode of dialogue between tax authority and taxpayer is a cooperative regime to which only a few large Italian industrial and banking groups1 have been admitted to.
The results of the tax risk management, control and mitigation activity, and of the dialogue status with the Italian Revenue Agency are periodically reported by the Tax Risk Officer and the Group Tax Department to the Group Audit, Risk, Sustainability and Corporate Governance Committee that, in its turn, reports to the Board of Directors of Pirelli & C. S.p.A..
The Tax Risk Officer is the new figure foreseen by the Cooperative Compliance regime in charge of the Tax Control Framework implementation and management with the aim of controlling and mitigating tax risks.
Pirelli has also adopted the Whistleblowing Policy for reporting unethical or illegal behaviors.
[1]To consult the complete list, please refer to the dedicated section in the Italian Revenue Agency.
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Stakeholder engagement
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Pirelli develops a constructive and transparent dialogue with the tax authorities of the countries in which the Group operates.
Such dialogue, based on respective trust and transparency, is supported by Cooperative Compliance tools if foreseen by local legislation and justified by the size and complexity of the operations of Pirelli in that country. The admission of Pirelli to the Cooperative Compliance regime by the Italian Revenue Agency from 2017 and the low risk rating assigned in 2019 by HMRC in the UK as part of the Business Risk Review can be quoted as examples.
In addition, in 2016 Pirelli launched a plan of Advance Pricing Agreements and Bilateral Advance Pricing Agreements in the countries of most relevance for the Group. Based on a transparent approach, such agreements share in advance with tax authorities the Group transfer pricing policy in order to avoid future controversy on transfer pricing issues.
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