It goes without saying that by entering into agency agreements, foreign companies may expand their business over and above their national borders; however, in doing so they take the chance to give rise to Agency P.E. whenever the agent may be deemed at the "dependency" of the principal.
According to the OECD Commentary, a tell-tale sign of dependency is found every time the agent is subject to the “detailed instructions” of the principal. However, under the EU and Italian law, the agent has the “duty” to comply with the instructions of the principal; this duty is part and parcel of the agency agreement, and, accordingly, does not undermine the independent status of the agent.
Based on the above: where to set the bar between instructions and dependency? The judgment issued by the Regional Tax Commission of Lombardia (No. 4869/2017) gives the opportunity to analyze the issue.
The full article in Italian can only be read by Corriere Tributario subscribers, for further information click here.