Most tax professionals assume that if a company provides a guarantee to its parent and charges nothing for it, the tax authorities will come knocking. Italy’s Supreme Court just said: not so fast.
On 7 May 2026, Italy’s highest court issued Ordinance No. 13136. An Italian subsidiary had provided guarantees worth roughly EUR 42 million securing a loan for its US parent. No fee was charged. The Italian Revenue Agency raised an assessment of over EUR 1.3 million per year. The Supreme Court threw it out.
Why was no fee required?
The court did not say that intra-group guarantees are always free. What it said is that the absence of a fee does not automatically create a transfer pricing problem. The analysis must look at the economic reality, not just the contract.
Three facts were decisive.
• The parent was genuinely at risk of insolvency.
• The subsidiary’s survival depended directly on the parent’s survival.
• The guarantee produced real, if indirect, economic value for the subsidiary by preserving revenue, operational continuity, and protection from the consequences of group failure.
Strip away the legal complexity and one principle remains
A transaction which looks unremunerated in isolation may in fact produce genuine value for the entity providing it, when viewed through the lens of the group’s overall economic arrangement. Where that indirect value is real and documented, a zero fee can be commercially rational and not a tax problem.
How does this compare to the OECD framework?
The OECD Transfer Pricing Guidelines (Chapter X) take a similar but narrower view. A guarantee that only reflects implicit support from group membership requires no fee. Where it adds something incremental, it should be priced based on the yield difference between guaranteed and unguaranteed borrowing.
The Italian ruling goes further. It accepts that a guarantor’s own economic interests—such as preserving group stability, revenues, or operations—can justify a zero fee, even where the guarantee provides a measurable benefit. In contrast to the OECD’s borrower-focused approach, the court also considers what the guarantor stands to lose.
This is not just an Italian issue
The reasoning in this ruling has relevance beyond any group with an Italian entity. It highlights that group interdependence can create genuine economic value that a purely standalone analysis may overlook — something tax teams in many jurisdictions can consider.
The CJEU cases it relies on (Hornbach-Baumarkt and Pizzarotti) apply across the EU, meaning EU-based guarantors can use the same foundation to support a zero-fee guarantee where group economics justify it.
Outside the EU, the underlying logic remains relevant in OECD-aligned systems that emphasize substance over form and economic reality.
What this means in practice
The key takeaway is this: the question is not “what fee should we charge?” but “what is the real economic arrangement, and do the terms reflect it when viewed in full?” That is the lens this ruling applies — and it is relevant well beyond Italy.
It also doesn’t reduce the need for documentation; it raises the bar. The taxpayer succeeded because the facts were clearly established in advance — the parent’s financial position, the operational interdependence, and the broader economic implications. That groundwork turned what could have been a challenge into a decisive win.