The Italian Supreme Court (Corte Suprema di Cassazione) recently issued two related decisions concerning transfer pricing adjustments made by the Italian Revenue Agency in regard to purchases made by an Italian company from related Chinese companies. The Italian company, UFI Filters SpA, paid Chinese companies UFI Filters (Shanghai) Co. Ltd. and Sofima Automotive Filter (Shanghai) Co. Ltd. for the supply of filters in 2009, the cost of which UFI Filters SpA deducted. However, the Italian Revenue Agency determined that the Chinese companies' markups of 39.77% and 17.2% respectively under the cost-plus method were not at arm's length and denied the...