| US vs Altera Corp, July 2018, US Court of Appeal, Nos 16-704996 | | In this case, the US Court of Appeal reversed a decision of the Tax Court that 26 C.F.R. § 1.482-7A(d)(2), under which related entities must share the cost of employee stock compensation in order for their cost-sharing arrangements to be classified as qualified cost-sharing arrangements and thus avoid an IRS adjustment, was invalid under the Administrative Procedure Act. The panel reasoned that the Commissioner of Internal Revenue did not exceed … | July 24, 2018 | Courts of the US | Cost Contribution Arrangements | Altera, Cost sharing agreement, Employee stock options | cost-contribution-arrangements | altera cost-sharing-agreement employee-stock-options |
| Israel vs Kontera and Finisar, April 2018, Supreme Court | | In these two cases from Israel the Supreme Court rules on the issue of whether or not companies using the cost plus method must include stock-based compensation in the cost base. The Court concludes that stock-based compensation is an integral part of the compensation package of the Israeli subsidiaries’ employees with the objective of improving the quality of services rendered and strengthening the bond between the companies’ and employees’ cohesive … | April 30, 2018 | Courts of Israel | Burden of Proof, Transfer Pricing Methods | Burden of proof, cost base, Cost plus method, Stock-based compensation, Transfer pricing documentation | burden-of-proof transfer-pricing-methods | burden-of-proof cost-base cost-plus-method stock-based-compensation transfer-pricing-documentation |
| Denmark vs Microsoft Denmark, March 2018, Danish National Court, SKM2018.416.ØLR | | The Danish Tax Ministry and Microsoft meet in Court in a case where the Danish tax authorities had issued an assessment of DKK 308 million. The Danish tax authorities were of the opinion that Microsoft had not been properly remunerated for performing marketing activities due to the fact that OEM sales to Danish customers via MNE OEM’s had not been included in the calculation of local commissions. In court, Microsoft … | March 28, 2018 | Courts of Denmark | Burden of Proof, Sales and Marketing Hubs, Transfer Pricing Documentation, Transfer Pricing Methods | Commissioner, Documentation, Double Irish Dutch sandwich, Ireland, Marketing, Microsoft, OEM | burden-of-proof sales-and-marketing-hubs transfer-pricing-documentation transfer-pricing-methods | commissioner documentation double-irish-dutch-sandwich ireland marketing microsoft oem |
| Denmark vs. Danish Production A/S, Feb 2018, Tax Tribunal, SKM2018.62.LSR | | In this case, the Danish Tax Tribunal found that the tax administration had been entitled to make an estimated assessment, due to the lack of a comparability analysis in the company’s transfer pricing documentation. The Tax Tribunal also found that the Danish company had correctly been chosen as tested party when applying the TNMM, although the foreign sales companies were the least complex. Information about the foreign sales companies was … | February 12, 2018 | Courts of Denmark | Transfer Pricing Documentation, Transfer Pricing Methods | Comparability analysis, Estimated assessment, Tested party, TNMM | transfer-pricing-documentation transfer-pricing-methods | comparability-analysis estimated-assessment tested-party tnmm |
| India vs. Vodafone India Services Pvt Ltd, Jan 2018, ITA No.565 Ahd 2017 | | The 2018 Vodafone case from India – whether termination of option rights under an agreement can be treated as a “deemed international transaction” under section 92B(2) of the Income Tax Act. Vodafone India Services had a call option to buy shares in SMMS Investment Pvt Ltd — which held 5.11% equity capital of the Vodafone India through a web of holdings for 2.78 crore if the fair market value of … | January 24, 2018 | Courts of India | Delineation - Substance over Form, Shares and Dividends, Tax Avoidance Schemes | Cayman Islands, Deemed international transaction, Netherlands, Options, termination of option | delineation-substance-over-form shares-and-dividends tax-avoidance-schemes | cayman-islands deemed-international-transaction netherland options termination-of-option |
| Norway vs. Exxonmobil Production Norway Inc., January 2018, Lagsmanret no LB-2016-160306 | | An assessment was issued by the Norwegian tax authorities for years 2009 2010 and 2011 concerning the interest on a loan between Exxonmobil Production Norway Inc. (EPNI) as the lender and Exxon Mobile Delaware Holdings Inc. (EMDHI) as the borrower. Both EPNI and EMDHI are subsidiaries in the Exxon Group, where the parent company is domiciled in the United States. The loan agreement between EPNI and EMDHI was entered into … | January 22, 2018 | Courts of Norway | Arm's Length Principle, Financing Transactions | Actual transaction, Aggregated transactions, Delaware, Delineation, ExxonMobile, Inter-company loan, Interest rate, Options realistically available, Price adjustment clause, step-up clause | arms_length_principle financial-transactions | actual-transaction aggregated-transactions delaware delineation exxonmobile inter-company-loan interest-rate options-realistically-available price-adjustment-clause step-up-clause |
| Sweden vs. Absolut Company AB, Jan 2018, Administrative Court, No. 1610-16 | | In 2016 the Swedish Tax Tribunal ruled against the tax administration in the case of The Absolut (vodka) Company AB. The Administrative Court of Appeal has now overturned the Tribunal’s ruling and consequently SEK 247 mio. are now added to the taxable income of The Absolut Company AB. The Swedish tax administration found that The Absolut Company AB sold Absolut Vodka below the arm’s length price to a group company – The … | January 16, 2018 | Courts of Sweden | Transfer Pricing Methods | Absolut Vodka, Benchmark study, Consistancy, Distribution services, Hindsight, Information from after the transfer, Interquartile range | transfer-pricing-methods | absolut-vodka benchmark-study consistancy distribution-services hindsight information-from-years-after-the-year-under-review interquartile-range |
| Europe vs Hamamatsu, Dec 2017, European Court of Justice, Case No C-529-16 | | The case concerns the effect of transfer pricing year-end adjustments on VAT – the relationship between transfer pricing and the valuation of goods for customs (VAT) purposes (Hamamatsu case C-529/16). Hamamatsu Photonics Deutschland GmbH (Hamamatsu) is a German subsidiary of the Japanese company Hamamatsu, and it acts as a distributor of optical devices purchased from the parent company. The transfer pricing policy of the group, which is covered by an … | December 20, 2017 | European Court of Justice | Arm's Length Principle | VAT (Costoms), Year end adjustment | arms_length_principle | vat-costoms year-end-adjustment |
| European Commission vs. Netherlands and IKEA, Dec. 2017 | | The European Commission has opened an in-depth investigation into the Netherlands’ tax treatment of Inter IKEA, one of the two groups operating the IKEA business. The Commission has concerns that two Dutch tax rulings may have allowed Inter IKEA to pay less tax and given them an unfair advantage over other companies, in breach of EU State aid rules. Commissioner Margrethe Vestager in charge of competition policy said: “All companies, … | December 18, 2017 | European Commission | EU State Aid | Acquisition of intellectual property, Franchise, Ikea, Inter-company loan, License fee, Netherlands, Royalty | eu_state-aid | acquisition-of-intellectual-property franchise ikea inter-company-loan licence-fee netherland royalty |
| US vs Coca Cola, Dec. 2017, US Tax Court, 149 T.C. No. 21 | | Coca Cola collects royalties from foreign branches and subsidiaries for use of formulas, brand and other intellectual property. Years ago an agreement was entered by Coca Cola and the IRS on these royalty payments to settle an audit of years 1987 to 1995. According to the agreement Coca-Cola licensees in other countries would pay the US parent company royalties using a 10-50-50 formula where 10% of the gross sales revenue … | December 14, 2017 | Courts of the US | Royalty and License Payments | Coca-Cola, Foreign tax credits, License agreement, Mexico, Royalty | royalty-payments | coca-cola foreign-tax-credits licence-agreement mexico royalty |
| Spain vs. Afinsa and Filatelico, Nov. 2017, Supreme Court, Case no 4008/2017 | | The Supreme Court of Spain ruling in the Afinsa Tangibles SA stamp-fraud case – a pyramid scheme that cheated 350,000 people out of billions of dollars. One of the biggest fraud cases in the history of Spain. In May 2016, the head offices of two investment firms, Forum Filatelico and Afinsa Tangibles, were sealed off by 300 police officers who seized documents, bundles of banknotes worth €10 million and various … | November 23, 2017 | Courts of Spain | Arm's Length Principle | Fraud, Scam, Tax evasion | arms_length_principle | fraud scam tax-evasion |
| India vs Google, Oct. 2017, Income Tax Appellate Tribunal | | Google Ireland licenses Google AdWords technology to its subsidiary in India and several other countries across the world. The Tax Tribunal in India found that despite the duty of Google India to withhold tax at the time of payment to Google Ireland, no tax was withheld. This was considered tax evasion, and Google was ordered to pay USD 224 million. The case has now been appealed by Google to the … | October 30, 2017 | Courts of India | Royalty and License Payments, Tax Avoidance Schemes | Ad words, Google, Ireland, Tax evasion, Withholding tax | royalty-payments tax-avoidance-schemes | ad-words google ireland tax-evasion withholding-tax |
| Netherland vs. A BV, October 2017, Lower Court, case no 2017: 5965 | | A Dutch parent company was providing support services to its foreign subsidiary on a cost-plus basis and received a compensation fee following a business restructuring where headquarter and strategic functions was transferred from the Dutch parent company to Switzerland. The Dutch tax authorities took the view that the compensation paid was insufficient, and that the Dutch parent company was still performing strategic functions for the group. The Court ruled that … | October 27, 2017 | Courts of Netherlands | Business Restructuring | Burden of proof, Business restructuring, Switzerland | business_restructuring | burden-of-proof business-restructuring switzerland |
| European Commission vs. UK, October 2017, State aid, CFC | | The European Commission has opened an in-depth probe into a UK scheme that exempts certain transactions by multinational groups from the application of UK rules targeting tax avoidance. It will investigate if the scheme allows these multinationals to pay less UK tax, in breach of EU State aid rules. | October 26, 2017 | European Commission | EU State Aid, Financing Transactions | CFC, Loans, State aid, UK | eu_state-aid financial-transactions | cfc loan state-aid uk |
| Norway vs. A AS, October 2017, Tax Tribunal, NS 71/2017 | | A Norwegian company, A, first acquired shares in Company C from a unrelated party D for tNKR 625. Company A then transferred the acquired shares in C to a subsidiary E, a shell company established by C for the purpose of the transaction. Company A then sold the shares in subsidiary E to the unrelated party D, from which it had originally bought the shares in C, for tNKR 3830, … | October 24, 2017 | Courts of Norway | Shares and Dividends, Valuation - DCF and CUT/CUPs | CUP method, Gjennomskjæring, Linear appreciation, Shares, Tax schemes, Unrelated party, Value | shares-and-dividends discounted_cash_flow_valuation | cup-method gjennomskjaering linear-appreciation shares tax-schemes unrelated-party value |
| European Commission vs. Amazon and Luxembourg, October 2017, State Aid – Comissions decision, SA.38944 | | Luxembourg gave illegal tax benefits to Amazon worth around €250 million The European Commission has concluded that Luxembourg granted undue tax benefits to Amazon of around €250 million. Following an in-depth investigation launched in October 2014, the Commission has concluded that a tax ruling issued by Luxembourg in 2003, and prolonged in 2011, lowered the tax paid by Amazon in Luxembourg without any valid justification. The tax ruling enabled … | October 4, 2017 | European Commission | EU State Aid, Royalty and License Payments | Amazon, Cost sharing agreement, Did not reflect economic reality, Empty shell, Intangibles, Luxembourg, Royalty, State aid, Tax avoidance | eu_state-aid royalty-payments | amazon cost-sharing-agreement did-not-reflect-economic-reality empty-shell intangibles luxembourg royalty state-aid tax-avoidance |
| UK vs. BNP PARIBAS, September 2017, FIRST-TIER TRIBUNAL TAX CHAMBER, TC05941 | | The issues in this case was: Whether the price of purchase of right to dividends were deductible. Whether the purchase and sale of right to dividends was trading transaction in course of Appellant’s trade. Whether the purchase price expenditure incurred wholly and exclusively for purposes of the trade. Whether HMRC were permitted to argue point in relation to section 730 ICTA that was not raised in closure notice and which they stated they were … | September 20, 2017 | Courts of the UK | Delineation - Substance over Form, Financing Transactions, Non-Recognition and Recharacterisation, Shares and Dividends, Tax Avoidance Schemes | Disregarding the transaction, Dividends, Fiscal motive, Rights of dividends | delineation-substance-over-form financial-transactions non-recognition shares-and-dividends tax-avoidance-schemes | disregarding-the-transaction dividends fiscal-motive rights-of-dividends |
| Finland vs Corp, September 2017, HFD:2017:145 | | Ruling by the Finnish Supreme Administrative Court on enterprise resource planning and intra-group services arrangements. A Oyj had provided its subsidiaries with supply chain services, marketing and brand management services as well as personnel and computer services. The services offered by A Plc mainly consisted in the coordination and harmonization of the Group’s operations. A’s turnover consisted almost exclusively of the service fees received from the sale of these administrative … | September 13, 2017 | Courts of Finland | Services and Fees | Enterprise Resource Planning, Intra-group services, Marketing services | services | enterprise-resource-planning intra-group-services marketing-services |
| Finland vs Corp, Sep. 2017, HFD No. 2017-146 | | Ruling by the Finnish Supreme Administrative Court on a service provider’s obligation to add a mark-up on its costs when calculating an arm’s length service charge. A Plc had provided services to it’s subsidiaryes related to supply chains, marketing and product brand management services, and human resource management services and adb services. Most of A Plc’s income consisted of these service. The amount invoiced corresponded to the servide “production cost”. … | September 13, 2017 | Courts of Finland | Services and Fees | Comparables | services | comparables |
| Canada vs Cameco Corp, Aug 2017, Federal Court, Case No T-856-15 | | In relation to ongoing audits regarding transfer payments, the tax authorities asked the Court to order approximately 25 personnel from Cameco Corporation and its wholly owned subsidiaries to be made available for interview regarding Cameco’s 2010, 2011, and 2012 income tax years. It was confirmed in Court that Cameco has complied with all audit requests related to the relevant years except the refused request for oral interviews. Cameco has agreed … | August 10, 2017 | Courts of Canada | Legality - Legitimacy - Constitutional | Cameco, Oral interviews, principle of proportionality, self incrimination, Soft spots, Submission of evidence | legality-legitimacy-constitutional | cameco oral-interviews principle-of-proportionality self-incrimination soft-spots submission-of-evidence |
| Canada vs. Burlington Resources Finance Company, Aug 2017, case NO. TCC 144 | | This case i about the legal requirement to submit evidence. The revenue service argues that the disputed questions are relevant to the matters in issue and that Burlington Resources Finance Company has either improperly refused to answer, or not fully answered, the questions. Burlington Resources Finance Company argues that all proper questions have been fully answered and that answers to improper questions have been correctly refused. The underlying tax assessment … | August 3, 2017 | Courts of Canada | Financing Transactions, Legality - Legitimacy - Constitutional | Hybrid loan, Submission of evidence | financial-transactions legality-legitimacy-constitutional | hybrid-loan submission-of-evidence |
| US vs EATON-CORPORATION, July 2017, US Tax Court, TC memo 2017-147 | | The IRS decided to cancel two advance pricing agreements (APAs) with Eaton Corporation. The US Tax Court ruled that this decision was an abuse of discretion. | July 26, 2017 | Courts of the US | Legality - Legitimacy - Constitutional, MAP - APA | Abuse of discretion, Advance pricing agreement, APA | legality-legitimacy-constitutional map-apa | abuse-of-discretion advance-pricing-agreement apa |
| France vs. Havas, July 2017, CE, No 400644 | | The French Court considers that in the event of a transfer of shares, the goodwill recognized at the acquisition of the shares shall no longer be included in the balance sheet of the parent company. | July 12, 2017 | Courts of France | Intangibles - Goodwill Know-how Patents, Shares and Dividends, Valuation - DCF and CUT/CUPs | Goodwill, Sale of subsidiary | intangibles shares-and-dividends discounted_cash_flow_valuation | goodwill sale-of-subsidiary |
| France vs. Google, July 2017, Administrative Court | | In this case the French tax administration argued that Google had a permenent establishment in France because the parent company in the US and its subsidiary in Ireland had been selling a service – online ads – to customers in France. The administrative court found that Google France did not have the capability to carry out the advertising activities on its own. Google Ireland Limited therefore did not have a permanent … | July 12, 2017 | Courts of France | Permanent Establishments, Tax Avoidance Schemes | Ireland, Permanent establishment | permenent-establishments tax-avoidance-schemes | ireland permanent-establishment |
| South Africa vs XYZ Corp, 30 June 2017, Tax Court, Case No. TC-2017-06 – TCIT 13065 | | The taxpayer is registered and incorporated in the Republic of South Africa and carries on business in the petrochemical industry. It has some of its subsidiaries in foreign jurisdictions. Business activities include the importation and refinement of crude oil. This matter concerns the analysis of supply agreements entered into between the XYZ Corp and some of its foreign subsidiaries. It thus brings to fore, inter alia the application of the … | June 30, 2017 | Courts of South Africa | Commodity Transactions, Sales and Marketing Hubs, Tax Avoidance Schemes | Back to back arrangement, Delineation, Fraus legis, Isle of Man, Marketing hubs, Oil trading, Penalty, Scam, Substance over form, Tax avoidance | commodity-transactions sales-and-marketing-hubs tax-avoidance-schemes | back-to-back-arrangement delineation fraus-legis isle-of-man marketing-hubs oil-trading penalty scam substance-over-form tax-avoidance |
| Sweden vs S BV, 16 June 2017, Administrative Court, case number 2385-2390-16 | | In this case S BV is not granted deductions in its Swedish PE for interest on debt relating to the acquisition of subsidiaries. The Court of Appeal considers that it is clear that key personnel regarding acquisition, financing and divestment of the shares in the subsidiary and the associated risks have not existed in the PE. It is also very likely that the holding of the shares has not been … | June 16, 2017 | Courts of Sweden | Permanent Establishments, Shares and Dividends | Acquisition of subsidiaries, Debt, Interest deduction, Permanent establishment | permenent-establishments shares-and-dividends | acquisition-of-subsidiaries debt interest-deduction permanent-establishment |
| Israel vs. Gteko Ltd (Microsoft), June 2017, District Court | | In November 2006 Microsoft Corp. purchased 100% of the shares of Gteko Ltd. (IT Support technology), for USD 90 million. The purchase was made with the intention of integrating Gteko’s technology into Microsoft’s own products. Following this purchase of Gteko Ltd., the employees were transferred to the local Microsoft subsidiary and a few months later another agreement was entered transferring Gteko’s intellectual property/intangibles to Microsoft. This transfer was priced at USD 26 million based on the … | June 6, 2017 | Courts of Israel | Business Restructuring, Intangibles - Goodwill Know-how Patents | Going concern, M&A, Microsoft, Purchase Price Allocation (PPA), Synergies, Transfer of intangibles | business_restructuring intangibles | going-concern ma microsoft purchase-price-allocation-ppa synergies transfer-of-intangibles |
| Norway vs Hess Norge AS, May 2017, Court of Appeal | | In this case a Norwegian subsidiary of an international group (Hess Oil), refinanced an intra-group USD loan two years prior to the loans maturity date. The new loan was denominated in Norwegian kroner and had a significantly higher interest rate. The tax authorities reduced the interest payments of the Norwegian subsidiary pursuant to section 13-1 of the Tax Act for fiscal years 2009 – 2011, thereby increasing taxable income for … | May 30, 2017 | Courts of Norway | Commercially Irrational Transactions, Financing Transactions | Actual situation as a subsidiary, Commercial rationality, Interest rate, Refinancing, Tax assessment | commercially-irrational-transactions financial-transactions | actual-situation-as-a-subsidiary commercial-rationality interest-rate refinancing tax-assessment |
| India vs Formula One World Championship Ltd, April 2017, India’s Supreme Court | | India’s Supreme Court found that Formula One World Championship which conducts Formula One racing events, has a permanent establishment (PE) for its business in India and income accruing from it is taxable. “We are of the opinion that the test laid down by the Andhra Pradesh High Court in Visakhapatnam Port Trust case fully stands satisfied. Not only the Buddh International Circuit is a fixed place where the commercial/economic activity of conducting … | April 24, 2017 | Courts of India | Permanent Establishments | Formula One, India, Permanent establishment, POEM | permenent-establishments | formula-one india permanent-establishment poem |
| Australia vs Chevron, 21 April 2017, Federal Court 2017 FCAFC 62 | | This case was about a cross border financing arrangement used by Chevron Australia to reduce it’s taxes – a round robin. Chevron Australia had set up a company in the US, Chevron Texaco Funding Corporation, which borrowed money in US dollars at an interest rate of 1.2% and then made an Australian dollar loan at 8.9% to the Australian parent company. The loan increased Chevron Australia’s costs and reduced taxable profits. The interest payments, which was not taxed … | April 21, 2017 | Courts of Australia | Financing Transactions, Tax Avoidance Schemes | Cross-border financing arrangements, Interest, Round robin, Tax free dividends | financial-transactions tax-avoidance-schemes | cross-border-financing-arrangements interest round-robin tax-free-dividends |
| European Commission vs. The Netherlands and Starbucks, March 2017 and October 2015, State Aid Investigation | | The European Commission’s investigation on granting of selective tax advantages to Starbucks BV, cf. EU state aid rules. | March 29, 2017 | European Commission | EU State Aid, Tax Avoidance Schemes | CUP method, EU, Netherlands, Royalties, Starbucks, State aid, Tax advantages, TNMM | eu_state-aid tax-avoidance-schemes | cup-method eu netherland royalties starbucks state-aid tax-advantages tnmm |
| US vs. Amazon, March 2017, US Tax Court | | In 2005 Amazon US entered into a cost sharing arrangement (CSA) with its Luxembourg subsidiary, Amazon Lux. Pursuant to entering the CSA, Amazon US granted Amazon Lux the right to use certain pre-existing intangible assets in Europe, including the intangibles required to operate Amazon’s European website business. This arrangement required Amazon Lux to make an upfront “buy-in payment” to compensate Amazon US for the value of the intangible assets that were to be transferred to Amazon Lux. As consideration for the transfer … | March 23, 2017 | Courts of the US | Cost Contribution Arrangements, Intangibles - Goodwill Know-how Patents, Tax Avoidance Schemes, Transfer Pricing Methods, Valuation - DCF and CUT/CUPs | Akin to a sale, Cost sharing agreement, CSA regs, CUT method, DCF model, Delaware, Ireland, Luxembourg, Pre-existing intangibles, Stock-based compensation, Valuation | cost-contribution-arrangements intangibles tax-avoidance-schemes transfer-pricing-methods discounted_cash_flow_valuation | akin-to-a-sale cost-sharing-agreement csa-regs cut-method dcf-model delaware ireland luxembourg pre-existing-intangibles stock-based-compensation valuation |
| Denmark vs. Corp, March 2017, Tax Tribunal, SKM2017.187 | | In this case the Danish Tax administration had made an estimated assessment due to a insufficient TP documentation. In the assessment goodwill amortizations were included when comparing the operating income of the company to that of independent parties in a database survey. The Tax Tribunal found that the tax administration was not entitled to make an estimated assessment under Article 3B (3) of the current Tax Control Act. 8 (now paragraph 9) … | March 13, 2017 | Courts of Denmark | Intangibles - Goodwill Know-how Patents, Transfer Pricing Documentation, Transfer Pricing Methods | Goodwill amortization, Operating income, Transfer pricing documentation | intangibles transfer-pricing-documentation transfer-pricing-methods | goodwill-amortization operating-income transfer-pricing-documentation |
| New Zealand vs Honk Land Trustee Limited, 10 March 2017, Court of Appeal | | The Court of Appeal upheld decisions of the High Court confirming the Commissioner of Inland Revenue’s disallowance of a $1,116,000 management fee for income tax purposes. The Court of Appeal dismissed Honk Land Trustees Limited’s (“HLT”) appeal on the following alternative grounds: (1) there was no satisfactory evidence to show that management services were in fact provided; (2) there was no sufficient nexus shown; and (3) in the event the … | March 10, 2017 | Courts of New Zealand | General Anti-Avoidance Rules (GAAR), Services and Fees, Tax Avoidance Schemes | Benefit test, GAAR, Management fee, Tax schemes | general-anti-avoidance-rule services tax-avoidance-schemes | benefit-test gaar management-fee tax-schemes |
| Canada vs Sifto Canada Corp, March 2017, Tax Court, Case No TCC 37 | | The issue before the court was whether the Canadian revenue service had the ability to issue the second reassessments given the Canadian and US competent authorities subsequently agreed on a MAP settelment. The Tax Court found that a settlement agreed to via the competent authority precluded a subsequent tax-reassessment that attempted to further increase the taxpayer’s income. | March 10, 2017 | Courts of Canada | Legality - Legitimacy - Constitutional, MAP - APA, Tax Treaties | Audit, Binding on the CRA, Mutual agreement procedure (MAP), Sifto | legality-legitimacy-constitutional map-apa tax-treaties | audit generally-binding-on-the-cra mutual-agreement-procedure-map sifto |
| Spain vs McDonald’s, March 2017, Spanish Tribunal Supremo, Case no 961-2017 | | This case is about adjustments made to a series of loans granted by GOLDEN ARCHES OF SPAIN SA (GAOS) to RMSA, throughout the period 2000/2004 for amounts ranging between 10,000,000 and 86,650,000 €, at a interest rate that between 3,450% and 6,020%. The tax administration argues that GAOS “has no structure or means to grant the loan and monitor compliance with its conditions … it does not have its own … | March 2, 2017 | Courts of Spain | Financing Transactions, Legality - Legitimacy - Constitutional | Inter-company loan, Ireland, Legal status of TPG, No control over risk, Transfer Pricing Guidelines | financial-transactions legality-legitimacy-constitutional | inter-company-loan ireland legal-status-of-tpg no-control-over-risk transfer-pricing-guidelines |
| UK vs. Ladbroke Group, February 2017, case nr. UT/2016/0012 & 0013 | | Tax avoidance scheme. Use of total return swap over shares in subsidiary to create a deemed creditor relationship. Value of shares depressed by novating liability for large loans to subsidiary. The scheme used by Ladbroke UK involved a total return swap and a novation of loans to extract reserves. Used to achieve a “synthetic transfer” of the JBB business to LB&G. In essence, this involved extracting the surplus which had accumulated in … | February 26, 2017 | Courts of the UK | Financing Transactions, General Anti-Avoidance Rules (GAAR), Shares and Dividends, Tax Avoidance Schemes | Loans, Swap, Synthetic transfer, Tax avoidance, Tax schemes | financial-transactions general-anti-avoidance-rule shares-and-dividends tax-avoidance-schemes | loan swap synthetic-transfer tax-avoidance tax-schemes |
| Venezuela vs. Brightstar, 23. Feb 2017, Tax Court of Caracas | | The Venezuelan tax authority claimed that Brightstar‘s profitability was not arm’s length, based on the profitability of comparable companies, cf. the Transactional Net Margin Method. The tax court ruled that Brightstar de Venezuela had correctly applied the TNMM and the tax auditors made a mistake when they calculated Brightstar’s profitability. The tax authorities should have analyzed each individual transaction and taken into account the segmented financial information of the audited … | February 23, 2017 | Courts of Venezuela | Transfer Pricing Methods | Brightstar, TNMM | transfer-pricing-methods | brightstar tnmm |
| Spain vs. Schwepps (Citresa), February 2017, Spanish Supreme Court, case nr. 293/2017 | | The Spanish Tax administration made an income adjustment of Citresa (a Spanish subsidiary of the Schweeps Group) Corporate Income Tax for FY 2003, 2004, 2005 and 2006, resulting in a tax liability of €38.6 millon. Citresa entered into a franchise agreement and a contract manufacturing agreement with Schweppes International Limited (a related party resident in the Netherlands). The transactions between the two group companies were not found to be in accordance with the arm’s … | February 21, 2017 | Courts of Spain | Transfer Pricing Methods | Contract manufacturing, CUP method, Franchise, Franchise agreement, Netherlands, TNMM, Transfer pricing documentation | transfer-pricing-methods | contract-manufacturing cup-method franchise franchise-agreement netherland tnmm transfer-pricing-documentation |
| Venezuela vs. Sodexho, 15. Dec 2016, Tax Court of Caracas | | Sodexho Venezuela had appealed an adjustment made under the Venezuelan transfer pricing rules. The tax authorities claimed that the interest rate charged by Sodexho on a loan, made to a related party outside Venezuela, was not at arm’s-length. The tax authorities claimed that when applying the CUP method and comparing the controlled transaction with an uncontrolled transaction, Sodexho Pass Venezuela should have used an active rate such as the prime … | December 15, 2016 | Courts of Venezuela | Financing Transactions | CUP method, Inter-company loan, Sodexho | financial-transactions | cup-method inter-company-loan sodexho |
| Denmark vs. Corp, December 2016, Tax Tribunal, SKM2017.115 | | The case relates to controlled transactions between a Danish company and its permanent establishment, as well as the calculation of taxable income of the permanent establishment. The Danish Tax Administration was entitled to make tax assessment in accordance with applicable Tax Law. The transfer pricing-documentation provided by the Company lacked a comparability analysis. The assessment was in line with the OECD Transfer Pricing Guidelines, but some corrections to the tax assessment … | December 15, 2016 | Courts of Denmark | Burden of Proof, Transfer Pricing Documentation | Permanent establishment, Transfer pricing documentation | burden-of-proof transfer-pricing-documentation | permanent-establishment transfer-pricing-documentation |
| Switzerland vs. A GmbH, 7 Dec. 2016, Administrative Court, Case No. SB.2016.00008 | | The distinction between cash pool receivables and long-term loans. A GmbH is a group company of the global A-group. The A Group also includes company F Ltd, which is responsible for the global treasury and cash pooling of the A Group. In 2008, A GmbH entered into an agreement with F Ltd on the short-term deposit of excess liquidity and short-term borrowing (cash pool). Under the terms of the agreement, … | December 7, 2016 | Courts of Switzerland | Financing Transactions | Cash pool, Delineation, Interest rate, Long term loan, Safe habor rates, Treasury, UK | financial-transactions | cash-pool delineation interest-rate long-term-loan safe-haven-rates treasury uk |
| US-vs-Analog-Devices-Subsidiaries-Nov-22-2016-United-State-Tax-Court-147-TC-no-15 | | In this case the US Tax Court held that a closing agreement did not result in retroactive indebtedness. Analog Devices Corp. repatriated cash dividends from a foreign subsidiary and claimed an 85% dividends received deduction for FY 2005, cf. US regs § 965. No related party indebtedness was reported by the company which would have limited the deduction available. During the audit of Analog Devises Corp. the IRS claimed that a 2 … | November 22, 2016 | Courts of the US | Arm's Length Principle, Shares and Dividends | Closing agreement, Retroactive indebtedness, Royalty | arms_length_principle shares-and-dividends | closing-agreement retroactive-indebtedness royalty |
| Spain vs. ZERAIM IBÉRICA, SA, Oct. 2016, Spanish Supreme Court, Case no 4675-2016 | | In this case ZERAIM IBÉRICA SA argues that the OECD Transfer Pricing Guidelines has not been applied propperly, as secret comparables have been used in determining the arm’s length price of controlled transactions between the Spanish company and its Dutch parent company. The court concludes that the “..Guidelines are considered to be merely recommendations to States, which are given an interpretative value.” The appeal filed by the company is dismissed … | October 19, 2016 | Courts of Spain | Legality - Legitimacy - Constitutional, Transfer Pricing Methods | Legal status of TPG, Netherlands, Secret comparables | legality-legitimacy-constitutional transfer-pricing-methods | legal-status-of-tpg netherland secret-comparables |
| Norway vs. IKEA Handel og Ejendom, October 2016, HRD 2016-722 | | In 2007, IKEA reorganised its property portfolio in Norway so that the properties were demerged from the Norwegian parent company and placed in new, separate companies. The shares in these companies were placed in a newly established property company, and the shares in this company were in turn sold to the original parent company, which then became an indirect owner of the same properties. The last acquisition was funded through … | October 18, 2016 | Courts of Norway | Commercially Irrational Transactions, Financing Transactions, General Anti-Avoidance Doctrines, General Anti-Avoidance Rules (GAAR), Non-Recognition and Recharacterisation, Shares and Dividends, Tax Avoidance Schemes | Business reasons, Gjennomskjæring, Inter-company loan, Interest deduction, Reorganisation, Tax schemes | commercially-irrational-transactions financial-transactions general-anti-avoidance-doctrines general-anti-avoidance-rule non-recognition shares-and-dividends tax-avoidance-schemes | business-reasons gjennomskjaering inter-company-loan interest-deduction reorganisation tax-schemes |
| Netherlands vs Corp, October 2016, Supreme Court 16/01370 | | In this case company A had acquired the business (assets and liabilities) of another company, through an Acquisition B.V. Company A provided a loan of EUR 300,000 to Acquisition B.V. in 2008. The Acquisition B.V. failed to perform well and went bankrupt in 2011. Company A claimed a write-down loss on the loan in its corporate income tax return. The Tax Administration stated that this was an extreme default risk … | October 14, 2016 | Courts of Netherlands | Financing Transactions, General Anti-Avoidance Rules (GAAR) | Extreme Default Risk loan (EDR), Inter-company loan | financial-transactions general-anti-avoidance-rule | extreme-default-risk-loan inter-company-loan |
| Spain vs. CÍTRICOS Y REFRESCANTES, S.A., Oct. 2016 | | The CÍTRICOS case is about the use of TNM-method in Spain prior to 2006. Article 16 of the pre-reform 2006 TRLIS, picked up the implementation of this method as a preferred respect to other methods. Following the amendment of the article, this preference has disappeared, invoking a new and more in line with the principles of the OECD. – Method net margin operations (TNMM) applied by the Administration. This method … | October 11, 2016 | Courts of Spain | Arm's Length Principle | Freedom of establishment, Statutes of limitation, TNMM | arms_length_principle | freedom-of-establishment statutes-of-limitation tnmm |
| Norway vs. ConocoPhillips, October 2016, Supreme Court HR-2016-988-A, (case no. 2015/1044) | | In this case a tax assessments based on anti-avoidance doctrine “gjennomskjæring” were set aside. The case dealt with the benefits of a multi-currency cash pool arrangement. The court held that the decisive question was whether the allocation of the benefits was done at arm’s length. The court dismissed the argument that the benefits should accure to the parent company as only common control between the parties which should be disregarded. The other circumstances regarding the actual transaction should … | October 5, 2016 | Courts of Norway | Financing Transactions, General Anti-Avoidance Doctrines, Non-Recognition and Recharacterisation, Series of Related Transactions, Tax Avoidance Schemes | Cash pool, Combined transactions, Conoco-Philips, Gjennomskjæring, Oil, Statutes of limitation, Tax schemes | financial-transactions general-anti-avoidance-doctrines non-recognition series-of-related-transactions tax-avoidance-schemes | cash-pool combined-transactions conoco-philips gjennomskjaering oil statutes-of-limitation tax-schemes |
| European Commission has opened investigation into Luxembourg’s tax treatment of the GDF Suez group (now Engie), September 2016 | | The European Commission has opened an in-depth investigation into Luxembourg’s tax treatment of the GDF Suez group (now Engie). The Commission has concerns that several tax rulings issued by Luxembourg may have given GDF Suez an unfair advantage over other companies, in breach of EU state aid rules. The Commission will assess in particular whether Luxembourg tax authorities selectively derogated from provisions of national tax law in tax rulings issued … | September 30, 2016 | European Commission | EU State Aid, Financing Transactions, Tax Avoidance Schemes | Double non taxation, Equity or Debt/Loan, Luxembourg, State aid, Tax rulings | eu_state-aid financial-transactions tax-avoidance-schemes | double-non-taxation equity-or-loan luxembourg state-aid tax-rulings |
| Czech Republic vs. Toll Manufacturer, Sep. 2016, Supreme Administrative Court, No. 5 Afs 194/2015 – 34 | | A Czech toll manufacturer realized losses due to low capacity utilization. Transfer pricing for the manufacturing services, had been determined by applying a cost plus method based on a budget costs without a year-end true-up. In 2008, capacity utilization was low due to market conditions and the company incurred a loss. The tax authority performed a benchmarking study using the transactional net margin method to determine the arm’s length range … | September 27, 2016 | Courts of the Czech Republic | Transfer Pricing Methods | capacity utilization risk, losses, Low risk, TNMM, Toll manufacturer | transfer-pricing-methods | capacity-utilization-risk losses low-risk tnmm toll-manufacturer |
| Germany vs. Corp. September 2016, Supreme Tax Court IV R 1 14 | | Tax depreciation for wind turbines presupposes economic ownership of the asset. A change in economic ownership requires that any risks are transferred to the purchaser/customer. The German Supreme Tax Court held that economic ownership of an asset is not transferred at the time it generates income but rather when the risk of accidental destruction and accidental deterioration of the asset passes to the buyer. The contractual agreements to that effect are … | September 22, 2016 | Courts of Germany | Burden of Proof | Economic ownership, Risk, Tax depreciation, Wind turbines | burden-of-proof | economic-ownership risk tax-depreciation wind-turbines |
| US vs. Exelon Corp, September 2016, US Tax Court | | The case was about a sale and lease back arrangement characterizised as a loan by the US tax authorities referring to “substance over form”. The Court agreed with the tax authorities. “We have held that all of the test transactions failed the substance over form inquiry because petitioner did not acquire the benefits and burdens of ownership in the assets involved in the test transactions. We have also concluded that the test … | September 19, 2016 | Courts of the US | Delineation - Substance over Form | Gain on sale, Sale-and-lease-back, Substance over form | delineation-substance-over-form | gain-on-sale sale-and-lease-back substance-over-form |
| Australia vs. Tech Mahindra Limited, September 2016, Federal Court, Case no. 2016 ATC 20-582 | | This case is about the interpretation of Article 7 (the business profits rule) and Article 12 (the royalties provision) of the Agreement between the Government of Australia and the Government of India for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income. The issue was misuse of the provision in article 12 about cross-border royalties and article 7 about business profits. The case was … | September 6, 2016 | Courts of Australia | Arm's Length Principle, Permanent Establishments | Business profits, Interpretation of article 7, Royalties | arms_length_principle permenent-establishments | business-profits interpretation-of-article-7 royalties |
| European Commission vs. Ireland and Apple, August 2016, State Aid Decision | | According to the European Commission Ireland gave illegal tax benefits to Apple worth up to €13 billion The European Commission has concluded that Ireland granted undue tax benefits of up to €13 billion to Apple. This is illegal under EU state aid rules, because it allowed Apple to pay substantially less tax than other businesses. Ireland must now recover the illegal aid. | August 10, 2016 | European Commission | EU State Aid, Tax Avoidance Schemes | Apple, EU state aid rules, Illegal tax benefit, Ireland, State aid | eu_state-aid tax-avoidance-schemes | apple eu-state-aid-rules illegal-tax-benefit ireland state-aid |
| Poland vs. Corp. Aug. 2016, Supreme Administrative Court, Case No. II FSK 1097/16 | | A Group had established a physical cash-pool where funds from participants was transferred to and from a consolidating account (cash pool). The Polish Supreme Administrative Court concluded that every agreement in which the lender is obligated to transfer ownership of a specified amount of funds to the borrower, and the borrower is obligated to return the amount and pay interest, even if obligations of the parties to the agreement are … | August 4, 2016 | Courts of Poland | Financing Transactions | Cash pool, Inter-company loan, Zero balancing pool | financial-transactions | cash-pool inter-company-loan zero-balancing-pool |
| US vs. Boston Scientific Corporation, July 2016 | | Boston Scientific Corporation entered into a Stipulation of Settled Issues with the IRS that is intended to resolve all disputes related to transfer pricing issues for Guidant Corporation’s 2001 through 2006 tax years and Boston Scientific’s 2006 and 2007 tax years. The Stipulation of Settled Issues is contingent upon the IRS Office of Appeals applying the same basis of settlement to all transfer pricing issues for Boston Scientific’s 2008 through … | July 19, 2016 | Courts of the US | Arm's Length Principle | Guidant Corporation, Settlement, Stipulation of Settled Issues | arms_length_principle | guidant-corporation settlement stipulation-of-settled-issues |
| Italy vs Tanti Investimentos S.A, Supreme Court, June 2016, No. 13387 | | In this case the Italien Supreme Court held that intra-group interest-free loans violates article 110(7); the Italien arm’s length provisions. | June 30, 2016 | Courts of Italy | Burden of Proof, Financing Transactions, Legality - Legitimacy - Constitutional | Interest free loan, Normal value | burden-of-proof financial-transactions legality-legitimacy-constitutional | interest-free-loan normal-value |
| Spain vs. Dell, June 2016, Supreme Court, Case No. 1475/2016 | | Dell Spain is part of a multinational group (Dell) that manufactures and sells computers. Dell Ireland, operates as distributor for most of Europe. Dell Ireland has appointed related entities to operate as its commissionaires in several countries; Dell Spain and Dell France are part of this commissionaire network. The Dell Group operates through a direct sales model. Purchase orders are placed on a web page or in a call centre. Dell Spain operated as … | June 20, 2016 | Courts of Spain | Business Restructuring, Permanent Establishments, Sales and Marketing Hubs, Tax Avoidance Schemes | Commissioner, Dell, Dependent agent, Fixed place of business, Ireland, Permanent establishment | business_restructuring permenent-establishments sales-and-marketing-hubs tax-avoidance-schemes | commissioner dell dependent-agent fixed-place-of-business ireland permanent-establishment |
| US vs. Medtronic Inc. June 2016, US Tax Court | | The IRS argued that Medtronic Inc failed to accurately account for the value of trade secrets and other intangibles owned by Medtronic Inc and used by Medtronic’s Puerto Rico manufacturing subsidiary in 2005 and 2006 when determening the royalty payments from the subsidiary. In 2016 the United States Tax Court found in favor of Medtronic, sustaining the use of the CUT method to analyze royalty payments. The Court also found … | June 9, 2016 | Courts of the US | Intangibles - Goodwill Know-how Patents, Royalty and License Payments, Transfer Pricing Methods | CUT method, Intangibles, Know-how, License, Pharmaceutical, Profit potential, Royalties | intangibles royalty-payments transfer-pricing-methods | cut-method intangibles know-how licence pharmaceutical profit-potential royalties |
| Sweden vs. Nobel Biocare Holding AB, HFD 2016 ref. 45 | | In January 2003, a Swedish company, Nobel Biocare Holding AB, entered into three loan agreements with its Swiss parent company. The loans had 15, 25 and 30 maturity respectively, with terms of amortization and with a variable interest rate corresponding to Stibor plus an interest rate margin of 1.75 percent points for one of the loans and 1.5 percent points for the other two loans. The same day the parent company transfered the … | June 7, 2016 | Courts of Sweden | Arm's Length Principle, Financing Transactions | Inter-company loan, Interest, Loans, Netherlands Antilles, Swiss | arms_length_principle financial-transactions | inter-company-loan interest loan netherlands-antilles swiss |
| Spain vs. PEUGEOT CITROEN AUTOMOVILES, May 2016, Supreme Court, case nr. 58/2015 | | In this case, the company had deducted impairment losses recognised on an investment in an Argentinean company (recently acquired from a related entity) arising from the conversion into capital of loans granted to the entity by other group companies, loans which had been acquired by the Spanish taxpayer. The tax administration argued that acquisition of such loans would not have taken place between independent parties due to the economic situation in Argentina at … | May 31, 2016 | Courts of Spain | Financing Transactions, General Anti-Avoidance Rules (GAAR), Non-Recognition and Recharacterisation, Shares and Dividends, Tax Avoidance Schemes | Argentina, Disregarding the transaction, Impairment loss, Loans | financial-transactions general-anti-avoidance-rule non-recognition shares-and-dividends tax-avoidance-schemes | argentina disregarding-the-transaction impairment-loss loan |
| India vs. Gap International Sourcing Pvt. Ltd., May 2016, ITA No.1077/Del./2016 | | Gap International Sourcing was engaged in sourcing products from India to other group companies. The activity comprised of assistance in identification of vendors, provision of assistance to vendors in procurement of apparel, inspection and quality control and coordination with vendors to ensure delivery of goods to group companies. The necessary technical and intellectual basis for provision of these services were provided by the group companies. The Indian company used TNMM … | May 17, 2016 | Courts of India | Services and Fees, Transfer Pricing Methods | Capacity to assume risks, commission based model, Functional analysis, Limited risk support service, Procurement activities, Service fees, TNMM | services transfer-pricing-methods | capacity-to-assume-business-risks commission-based-model functional-analysis limited-risk-support-service procurement-activities service-fees tnmm |
| India vs. L’oreal India Pvt. Ltd. May 2016, Income Tax Appellate Tribunal | | L’oreal in India is engaged in manufacturing and distribution of cosmetics and beauty products. In respect of the distribution L’oreal had applied the RPM by benchmarking the gross margin of at 4o.80% against that of comparables at 14.85%. The tax administration rejected the RPM method on the basis that the L’oreal India was consistently incurring losses and the gross margins cannot be relied upon because of product differences in comparables. Accordingly, the tax administration applied Transactional … | May 4, 2016 | Courts of India | Transfer Pricing Methods | Business strategies, Comparability analysis, L'oreal, Losses that continue indefinitely, market penetration strategy, RPM method, TNMM | transfer-pricing-methods | business-strategies comparability-analysis loreal losses-that-continue-indefinitely market-penetration-strategy rpm-method tnmm |
| Italy vs Edison s.p.a. April 2016, Supreme Court no 7493 | | In this case is about inter-group funding. The Italien company had qualified a funding arrangement as a non-interest-bearing contribution for future capital increase, hence part of Net Equity. The Italian Supreme Court found that intra-group financing agreements are subject to transfer pricing legislation and that non-interest-bearing financing is generally not consistent with the arm’s-length principle. | April 15, 2016 | Courts of Italy | Burden of Proof, Financing Transactions, Shares and Dividends | Burden of proof, Delineation, Equity or Debt/Loan, Interest free loan, Shareholder loan | burden-of-proof financial-transactions shares-and-dividends | burden-of-proof delineation equity-or-loan interest-free-loan shareholder-loan |
| France vs Société Lifestand vivre debout, 15 April 2016, CE | | In the case of Société Lifestand vivre debout, the Court considered that there was economic control in a situation where the rent for Swiss premises used by a Swiss entity was paid by a French company. The functions related to the activity of the Swiss company were actually performed by the French company. The French manager managed the Swiss company. Consequently, the transactions conducted between these two entities needed to … | April 15, 2016 | Courts of France | Arm's Length Principle | Actual control, Control, Management, Rent, Swiss | arms_length_principle | actual-control control management rent swiss |
| Sweden vs. taxpayer april 2016, Swedish Supreme Administrative Court, HFD 2016 ref. 23 | | In this case the Swedish Supreme Administrative Court makes it clear that OECD materials can be used for interpreting Swedish domestic legislation in cases where the domestic legislation is based on OECD guidance and principles. It is also concluded, that the fact that an agreement is given a certain legal term does not mean that the Court i bound by that classification. It is the true meaning of the agreement – based on … | April 12, 2016 | Courts of Sweden | Arm's Length Principle, Legality - Legitimacy - Constitutional | Domestic legislation, Interpretation, Lables, Legal status of TPG | arms_length_principle legality-legitimacy-constitutional | domestic-legislation interpretation lables legal-status-of-tpg |
| Italy vs PDM D srl, 2016, Supreme Court case no. 6331-2016 | | This case is about intragroup financing between an Italian company and a related group company in Luxembourg. The Supreme Court stated that Italien Transfer pricing rules have the purpose of allowing the tax administration to control prices applied to commercial and/or financial transactions between controlled companies resident in different countries in order to avoid any “artificial” adjustments of these prices by the MNE for the purpose of optimizing the group’s … | April 1, 2016 | Courts of Italy | Financing Transactions, Tax Avoidance Schemes | Loans, Luxembourg | financial-transactions tax-avoidance-schemes | loan luxembourg |
| France vs. Sté Amycel France, 16 March 2016, CE, No 372372), | | In Sté Amycel France the Court held that the Tax Administration must use an “appropriate” comparable when making transfer pricing adjustments. The French company was selling goods to both group companies and unrelated final customers. The tax administration had used a transaction with the third party customers as an internal comparable. However, as the related companies were acting as distributors, the comparison with the pricing applied to a third party … | March 16, 2016 | Courts of France | Arm's Length Principle, Transfer Pricing Methods | Comparability, CUP method, Internal comparables | arms_length_principle transfer-pricing-methods | comparability cup-method internal-comparables |
| US vs. Guidant Corporation. February 2016 | | The U.S. Tax Court held in favor of the Commissioner of Internal Revenue, stating that neither Internal Revenue Code §482 nor the regulations thereunder require the Respondent to always determine the separate taxable income of each controlled taxpayer in a consolidated group contemporaneously with the making of the resulting adjustments. The Tax Court further held that §482 and the regulations thereunder allow the Respondent to aggregate one or more related … | February 29, 2016 | Courts of the US | Arm's Length Principle, Intangibles - Goodwill Know-how Patents, Royalty and License Payments, Transfer Pricing Methods | Aggregated transactions, Ireland, License, Related transactions, Royalty | arms_length_principle intangibles royalty-payments transfer-pricing-methods | aggregated-transactions ireland licence related-transactions royalty |
| US vs Altera. February 2016, Appeal | | On July 27, 2015 the United States Tax Court issued its ruling regarding the petition filed by Altera Corporation and its subsidiaries against the Commissioner of Internal Revenue. The court found in favor of the Altera, concluding that on an arm’s length basis employee profit sharing should not be included in compensation between related parties under Qualified Cost Sharing Agreements. Following the filing of its appeal on February 23, 2016, … | February 23, 2016 | Courts of the US | Cost Contribution Arrangements | Cost sharing agreement, Stock based compensation costs | cost-contribution-arrangements | cost-sharing-agreement stock-based-compensation-costs |
| Canada vs. Marzen Artistic Aluminum. January 2016 | | The intercompany transactions at issue involved fees paid to the company’s wholly-owned Barbados based subsidiary during taxation years 2000 and 2001 for sales, marketing and support services. The Tax Court of Canada had determined that it was appropriate to apply the CUP method rather than the TNMM, which was advocated by the company’s expert. Canada’s Federal Court of Appeal upheld the decision by the Tax Court of Canada, which in 2014 ruled … | January 29, 2016 | Courts of Canada | Sales and Marketing Hubs, Transfer Pricing Methods | Barbados, CUP method, Marketing hubs, Marketing services, Sales services, Support services, TNMM | sales-and-marketing-hubs transfer-pricing-methods | barbados cup-method marketing-hubs marketing-services sales-services support-services tnmm |
| Germany vs. Corp. January 2016, Supreme Tax Court I R 22 14 | | The Supreme Tax Court has held that a parent company cannot be deemed to have earned income from allowing its Polish subsidiary to register locally in the group name. A German business was active in a field of patented technology associated with its own firm name, “B”. It allowed its Polish subsidiaries to register in that name, “B Sp.z.o.o.”, but made an appropriate charge for the use of the technology. … | January 21, 2016 | Courts of Germany | Intangibles - Goodwill Know-how Patents, Royalty and License Payments | Group name, Intangibles, Logo, Royalty | intangibles royalty-payments | group-name intangibles logo royalty |
| Switzerland vs Corp, 16. Dezember 2015, Case No. SB-2015-00005 | | A AG granted loans to group companies as part of a cash pooling system via the parent company. The Swiss tax administration found the interest insufficient, resulting in a hidden profit distribution. According to the Swiss rules and doctrine, transactions between related parties must be consistent with the arm’s length principle. For the third-party comparison, the Court relied on the long-term interest rates, even if the cash pool balances were … | December 16, 2015 | Courts of Switzerland | Financing Transactions | Cash pool, Interest rate, Swap | financial-transactions | cash-pool interest-rate swap |
| US v Coca-Cola, December 2015. US Tax Court | | The Coca-Cola Company submitted a petition to the U.S. Tax Court, requesting a redetermination of the deficiencies in Federal income tax for the years ended December 31, 2007, 2008 and 2009, as set forth by the Commissioner of Internal Revenue in a Notice of Deficiency dated September 15, 2015. The total amount in dispute is over $3.3 billion for the 3-year period. Major issues in the dispute include the method … | December 14, 2015 | Courts of the US | Arm's Length Principle, Transfer Pricing Methods | Coca-Cola, Foreign tax credits, Formulas, Trademark | arms_length_principle transfer-pricing-methods | coca-cola foreign-tax-credits formulas trademark |
| France vs. Sté Property Investment Holding, 9 December 2015, CE No 367897 | | In the case of Sté Property Investment Holding a French company deducted fees paid for management services provided by a foreign related company. The court indicated that, even if the recharge concerned fees charged by subcontractors of the foreign company, the French company could only deduct the fees if it could prove that the services provided were real, the services were not duplicates, and the price of the services complied … | December 9, 2015 | Courts of France | Services and Fees | Benefit test, Services | services | benefit-test services |
| Australia vs. Orica Limited, December 2015 Federal Court, FCA 1399; 2015 ATC 20-547. | | The Orica case involve funding of an overseas entity or operations by an Australian entity, where the funds are subsequently provided back to the Australian entity or its Australian associate in a manner which purportedly generates Australian tax deductions while not generating corresponding Australian assessable income (Free dip). The arrangements essentially involve the “round robin” movement of funds where an entity claims income tax deductions in Australia for costs of borrowing … | December 3, 2015 | Courts of Australia | Financing Transactions, Non-Recognition and Recharacterisation, Tax Avoidance Schemes | Free dip, Hybrid loan, Inter-company loan, Round robin, Tax schemes | financial-transactions non-recognition tax-avoidance-schemes | free-dip hybrid-loan inter-company-loan round-robin tax-schemes |
| Germany vs. Corp. November 2015, Supreme Tax Court judgment I R 57/13 | | The Supreme Tax Court held – contrary to the finance ministry interest limitation decree – that the exception for interest payments to a significant shareholder of not more 10% of the company’s total borrowing cost applies separately for each shareholder, rather than to all significant shareholders cumulatively. There are a number of exceptions to the interest limitation rule essentially limiting the annual interest deduction to 30% of EBITDA as shown … | November 11, 2015 | Courts of Germany | Financing Transactions, General Anti-Avoidance Rules (GAAR) | Borrowing cost, EBITDA, Interest deduction, Interest limitation, Thin cap | financial-transactions general-anti-avoidance-rule | borrowing-cost ebitda interest-deduction interest-limitation thin-cap |
| Australia vs. Chevron Australia Holdings Pty Ltd . October 2015, Federal Court of Australia, case No. 3 and 4 | | The Australien Chevron case was about a $US 2.5 billion intercompany loan between Chevron Australia and its US subsidiary, Chevron Texaco, and whether the interest paid on the loan by Chevron Australia exceeded the arm’s length price. Chevron Australia had set up a company in the US, Chevron Texaco Funding Corporation, which borrowed money in US dollars at an interest rate of 1.2% and then made an Australian dollar loan at 8.9% to the Australian … | October 23, 2015 | Courts of Australia | Burden of Proof, Financing Transactions, General Anti-Avoidance Rules (GAAR), Tax Avoidance Schemes, Transfer Pricing Methods | Burden of proof, Comparability, Implicit support/guarantee, Inter-company loan, Round robin, Tax schemes | burden-of-proof financial-transactions general-anti-avoidance-rule tax-avoidance-schemes transfer-pricing-methods | burden-of-proof comparability implicit-support inter-company-loan round-robin tax-schemes |
| European Commission vs Luxembourg and Fiat, October 2015, State Aid Decision | | The European Commission have decided that selective tax advantages for Fiat in Luxembourg are illegal under EU state aid rules. | October 21, 2015 | European Commission | EU State Aid, Tax Avoidance Schemes | Fiat, Illegal tax benefit, Luxembourg, State aid | eu_state-aid tax-avoidance-schemes | fiat illegal-tax-benefit luxembourg state-aid |
| Germany vs. Corp, October 2014, Supreme Tax Court judgment I R 31/13 | | The German Supreme Tax Court rejected the tax administrations recharacterisation of a repayment of share capital to a payment of dividend. A German company resolved a share capital reduction of €16 m in preparation for a capital repayment to avoid an IFRS consolidation requirement for its sole shareholder, a public utility. It took the reduction to capital reserve, waited as required by the German Company Act for one year after a … | October 21, 2015 | Courts of Germany | Financing Transactions, General Anti-Avoidance Rules (GAAR), Non-Recognition and Recharacterisation, Shares and Dividends | Consolidation requirement, Recharacterise, Requalification, Share capital, Withholding tax | financial-transactions general-anti-avoidance-rule non-recognition shares-and-dividends | consolidation-requirement recharacterise requalification share-capital withholding-tax |
| Germany vs. Corp. October 2015, Supreme Tax Court decision I R 20/15 | | The Supreme Tax Court has requested the Constitutional Court to rule on the conformity of the interest limitation with the constitutional requirement to tax like circumstances alike. The interest limitation disallows net interest expense in excess of 30% of EBITDA. However, the rule does not apply to companies with a total net annual interest cost of no more than €3 m or to those that are not part of a … | October 14, 2015 | Courts of Germany | Financing Transactions, General Anti-Avoidance Rules (GAAR), Legality - Legitimacy - Constitutional | Interest deduction, Interest limitation, Thin cap, Unconstitutional | financial-transactions general-anti-avoidance-rule legality-legitimacy-constitutional | interest-deduction interest-limitation thin-cap unconstitutional |
| Denmark vs Corp. October 2015, Supreme Court, case nr. SKM2015.659.HR | | A Danish production company terminated a 10-year license and distribution agreement with a group distribution company one year prior to expiry of the agreement. The distribution agreement was transferred to another group company and the new distribution company agreed as a successor in interest to pay a "termination fee" to the former distribution company. However, the termination fee was paid by the Danish production company and the amount was depreciated … | October 8, 2015 | Courts of Denmark | Business Restructuring | Distribution agreement, License agreement, Termination, Termination fee | business_restructuring | distribution-agreement licence-agreement termination termination-fee |
| Italy vs. ILPEA SPA, July 2015, Supreme Court 15298 | | This case is about an Italian company, ILPEA S.p.A, transactions with it’s US subsidiary. The company stated that there were substantial difference between the products sold to its subsidiary in the United States and the benchmark transactions considered by the Tax Administration: quality of the products, volumes of sales, terms of sale. These differences affected the pricing, so that these transactions could not be compared with other transactions with independent … | July 25, 2015 | Courts of Italy | Transfer Pricing Methods | Benchmark, CUP method, Normal value | transfer-pricing-methods | benchmark cup-method normal-value |
| Italy vs SAME DEUTZ FAHR ITALIA s.p.a, July 2015, Supreme Court, no 15282 | | This case is about methods applicable for determination of “normal value” in transactions between related companies; the Comparable Uncontrolled Price method (CUP). Click here for translation | July 21, 2015 | Courts of Italy | Arm's Length Principle, Burden of Proof, Transfer Pricing Methods | CUP method, Normal value | arms_length_principle burden-of-proof transfer-pricing-methods | cup-method normal-value |
| Spain vs. INC Bank, July 2015, Spanish National High Court | | In the INC bank case the tax administration recharacterised part of the interest-bearing debt of the bank branch as “free” capital, with the consequent reduction of the tax-deductible expenses for debt interest. The adjustment made in relation to year 2002 and 2003 was based on the Commentaries on the OECD Model Convention approved in 2008 The court did not agree with the “dynamic interpretation” of Article 7 applied by the … | July 10, 2015 | Courts of Spain | Financing Transactions, Non-Recognition and Recharacterisation, Permanent Establishments | Article 7, Equity or Debt/Loan, Permanent establishment | financial-transactions non-recognition permenent-establishments | article-7 equity-or-loan permanent-establishment |
| Germany vs. Corp. June 2015, Supreme Tax Court judgment I R 29/14 | | The Supreme Tax Court has held that a write-off of an irrecoverable related-party loan is not subject to income adjustment under the arm’s length rules, although the interest rate should reflect the bad debt risk. The German subsidiary of a Canadian group lent significant sums to its under-capitalised UK subsidiary. The debt proved irrecoverable and was written off in 2002 when the UK company ceased trading. At the time, such … | June 24, 2015 | Courts of Germany | Financing Transactions | Bad debt risk, Credit risk, Interest, Loans, Related-party loan, Substituted share capital, Unsecured loans, Write off | financial-transactions | bad-debt-risk credit-risk interest loan related-party-loan substituted-share-capital unsecured-loans write-off |
| South Africa vs. AB LLC and BD Holdings LLC, May 2015, Tax Court, Case No: 13276 | | US companies, AB LLC and BD Holdings LLC, came to South Africa in 2007 to perform certain services for X, a company based in and operating from South Africa. To perform these services they concluded a contract with X. There only purpose for coming to South Africa was to perform the services and earn income or profits in terms of the contract. Having achieved this objective they left the country … | May 15, 2015 | Courts of South Africa | Permanent Establishments | DTA article 5, Fixed place of business, Interpretation of international treaties, Permanent establishment, Rule of 183 days | permenent-establishments | dta-article-5 fixed-place-of-business interpretation-of-international-treaties permanent-establishment 183-days-rule |
| Norway vs. GE Healthcare AS, May 2015, Supreme Court , HRD-2015-01008-A | | The Supreme Court concluded that the Norwegian taxation of incomes in Ireland were not in violation of the treaty Article 7. 1 and showed that the double taxation which thus arose, in Article 24. 2 gave GE Healthcare AS a tax deduction in Norway equal to the taxes paid by income in Ireland. Such deduction was made by tax decision in the case. GE Healthcare AS was thus protected against … | May 8, 2015 | Courts of Norway | Financing Transactions, Tax Avoidance Schemes, Tax Treaties | Article 7, Ireland, Violation of the treaty | financial-transactions tax-avoidance-schemes tax-treaties | article-7 ireland violation-of-the-treaty |
| Switzerland vs DK Bank, May 2015, Federal Supreme Court, Case No BGE 141 II 447) | | The Federal Supreme Court denied the refund of withholding taxes claimed by a Danish bank on the basis of the double tax treaty between Denmark and Switzerland due to the lack of beneficial ownership. The Danish bank entered into total return swap agreements with different clients. For hedging purposes, the Danish bank purchased a certain amount of the underlying assets (companies listed in the Swiss stock exchange) and received dividend … | May 5, 2015 | Courts of Switzerland | Financing Transactions, Tax Treaties | Beneficial owner, Double tax treaty, Swap, Tax avoidance, Total return swap | financial-transactions tax-treaties | beneficial-owner double-tax-treaty swap tax-avoidance total-return-swap |
| Norway vs. Total E&P Norge AS, October 2015, Supreme Court 2014/498, ref no. HR-2015-00699-A | | Total E&P Norge AS (Total) is engaged in petroleum exploration and production activities on the Norwegian Continental Shelf. Income from such activities is subject to a special petroleum tax, in addition to the normal corporate tax, resulting in a total nominal tax rate of 78%. In 2002-2007, Total sold gas to the controlled trading companies, and the trading companies resold the gas to third parties on the open market. The … | March 27, 2015 | Courts of Norway | Burden of Proof, Commodity Transactions, Legality - Legitimacy - Constitutional, Transfer Pricing Documentation, Transfer Pricing Methods | Due and proper case handling, Obiter dictum, Oil and gas, Price formula, Secret comparables | burden-of-proof commodity-transactions legality-legitimacy-constitutional transfer-pricing-documentation transfer-pricing-methods | due-and-proper-case-handling obiter-dictum oil-and-gas price-formula secret-comparables |
| US vs. BMC Software. March 2015 | | The United States Court of Appeals for the Fifth Circuit issued its ruling on the case of BMC Software, Inc. v. Commissioner of Internal Revenue. The case discussed issues relating to § 965 regarding repatriation of dividends and § 482. Following an audit, BMC had entered into a Closing Agreement, making primary and secondary adjustments to its transfer pricing arrangements. The Commissioner argued that the secondary adjustment affected BMC’s application … | March 3, 2015 | Courts of the US | Arm's Length Principle | Closing agreement, Repatriation of dividends, Secondary adjustments | arms_length_principle | closing-agreement repatriation-of-dividends secondary-adjustments |
| Canada vs. Skechers USA Canada Inc. March 2015, Federal Court of Appeal | | In this case the Federal Court of Appeal upheld the decision of the Canadian International Trade Tribunal in which the tribunal upheld seven decisions – one for each of the years 2005 through 2011 – of the Canada Border Services Agency under subsection 60(4) of Canada’s Customs Act. Skechers Canada, a subsidiary of Skechers USA, purchases footwear to sell in Canada from its parent at a price equal to the price paid by Skechers … | March 2, 2015 | Courts of Canada | Cost Contribution Arrangements, Intangibles - Goodwill Know-how Patents, Royalty and License Payments | Cost sharing agreement, CSA, CUP method, Customs, Embedded intangibles, Intellectual property, R&D payments | cost-contribution-arrangements intangibles royalty-payments | cost-sharing-agreement csa cup-method customs embedded-intangibles intellectual-property rd-payments |
| France vs. Rottapharm, Jan 2015, CE No 369214 | | In the Rottapharm case The French “abnormal management action” principle was invoked. The Court overruled the decision of the tax administration under the principle of non-intervention, which prevents the tax administration from getting involved in company management. The fact that an advertising campaign costs more than the usual amount spent by the majority of companies in the same business area for similar products does not prove that the advertising campaign … | January 23, 2015 | Courts of France | General Anti-Avoidance Doctrines | Abnormal act of management, Advertising campaign, Burden of proof | general-anti-avoidance-doctrines | abnormal-act-of-management advertising-campaign burden-of-proof |
| Switzerland vs. Corp, Jan. 2015, Case No. 2C_1082-2013, 2C_1083-2013 | | In this case, the Swiss Court elaborates on application of the arm’s length principel, transfer pricing methods, OECD TPG, and the burden of proof in Switzerland. Excerp in English (unofficial translation) “5.1. The question of whether there is a disproportion between the service provided by the company and the compensation it provides is determined by comparison with what has been agreed between independent persons (“Drittvergleich”): the question is whether the … | January 15, 2015 | Courts of Switzerland | Arm's Length Principle, Burden of Proof, Legality - Legitimacy - Constitutional | Arm's length principel, Burden of proof, Transfer Pricing Guidelines, Transfer pricing methods | arms_length_principle burden-of-proof legality-legitimacy-constitutional | arms-length-principel burden-of-proof transfer-pricing-guidelines transfer-pricing-methods |
| Italy vs GE TRANSPORTATION SYSTEMS SPA, December 2014, Supreme Court 27296 | | In this case the Italien tax administration concluded that transactions between an Italien company an a German sister company had been priced lower than the “normal value”. The Court found that in relation to intercompany transactions GE Transportation Systems S.p.A. was a contract manufacturer. The German company owned the intellectual property. In relation to transactions with independent companies, GE Transportation Systems S.p.A. assumed the risks of the transaction and had … | December 23, 2014 | Courts of Italy | Transfer Pricing Documentation | Bargaining power, Comparability analysis, Contract manufacturing, Know-how | transfer-pricing-documentation | bargaining-power comparability-analysis contract-manufacturing know-how |
| India vs. Quark Systems Pvt. Ltd. Oct 2014, ITA No.282 | | Quark Systems Pvt. is engaged in providing customer support services on behalf of the Quark Group. TNMM had been applied as the most appropriate method for determining arm’s length income. In an audit, the tax administration rejected one of the companies selected as a comparable on the basis that it was in a start-up and had losses for consecutive years. Quark Systems argued that once functional comparability is established, the comparable should not be rejected on grounds such … | October 31, 2014 | Courts of India | Transfer Pricing Methods | Benchmark study, Comparability analysis, Functional analysis, Losses that continue indefinitely, TNMM | transfer-pricing-methods | benchmark-study comparability-analysis functional-analysis losses-that-continue-indefinitely tnmm |
| Switzerland vs Corp, Oct. 2014, Federal Supreme Court, Case No. 4A_138-2014 | | Decision on the criteria for the arm’s length test of interest rates on inter-company loans. This case i about intercompany loans created by zero balancing cash pooling and the funding of group companies by a group finance company. The Swiss Federal Supreme Court states – If the terms of inter-company loans are not conforming to market conditions, then the payment qualifies as a distribution and a special reserve must be … | October 16, 2014 | Courts of Switzerland | Financing Transactions | Cash pool, Hidden distribution of profits, Zero balancing pool | financial-transactions | cash-pool hidden-distribution-of-profits zero-balancing-pool |
| Switzerland vs Swisscargo AG, Oct 2014, Federal Supreme Court, Case No 4A_138/2014 | | Zero balancing/physical cash pooling involves a physical transfer of money from the accounts of individual group companies to the accounts of the group’s cash pooling company and risks can be considerable. Group companies participating ind the cash pool may loose there funds. Loans in the form of cash pool arrangements must be agreed at arm’s length terms. Click here for translation | October 16, 2014 | Courts of Switzerland | Financing Transactions | Cash pool, Risk, Zero balancing pool | financial-transactions | cash-pool risk zero-balancing-pool |
| Russia vs British American Tobacco, Aug. 2014, Russian High Court | | A russian subsidiary of British American Tobacco was found by the russian tax administration to have overpaid interest on loans from an affiliate in the Netherlands. The Court ruled in favor of the tax administration | August 5, 2014 | Courts of Russia | Financing Transactions, General Anti-Avoidance Rules (GAAR) | British American Tobacco, Inter-company loan, Netherlands, Thin cap | financial-transactions general-anti-avoidance-rule | british-american-tobacco inter-company-loan netherland thin-cap |
| Italy vs Alfa Gomma SUD s.r.l. July 2014, Supreme Court 16480 | | This case was about tax deductibility of service costs charged to an Italien company by an European Cost Centre within the group. The Supreme Court stated that it is necessary to give evidence that the Italian company have actually received a service and that this service is objectively definable and documented. The Court ruled in favor of the tax administration. Click here for translation | July 18, 2014 | Courts of Italy | Cost Contribution Arrangements, Services and Fees | Benefit test, Cost sharing agreement, Service cost | cost-contribution-arrangements services | benefit-test cost-sharing-agreement service-cost |
| Finland vs. Corp, July 2014, Supreme Administrative Court HFD 2014:119 | | A Ab had in 2009 from its majority shareholder B, based in Luxembourg, received a EUR 15 million inter-company loan. A Ab had in 2009 deducted 1,337,500 euros in interest on the loan. The loan had been granted on the basis that the banks financing A’s operations had demanded that the company acquire additional financing, which in the payment scheme would be a subordinated claim in relation to bank loans, and by its nature … | July 4, 2014 | Courts of Finland | Delineation - Substance over Form, Financing Transactions, Legality - Legitimacy - Constitutional, Non-Recognition and Recharacterisation, Tax Avoidance Schemes, Tax Treaties | Double tax treaty, Equity or Debt/Loan, Hybrid loan, Loans, Non-recognition, Recharacterise, Substance over form | delineation-substance-over-form financial-transactions legality-legitimacy-constitutional non-recognition tax-avoidance-schemes tax-treaties | double-tax-treaty equity-or-loan hybrid-loan loan non-recognition recharacterise substance-over-form |
| South Africa vs MTN International Ltd (Mauritius), Marts 2014, Supreme Court of Appeal, Case No. 275/2013 [2014] ZASCA 8 | | The issue before the Supreme Court of Appeal was whether a tax assessment issued by the Commissioner for the South African Revenue Service (SARS), in terms of the Income Tax Act 58 of 1962, for the year 2006 were to be set aside. MTN International Ltd had claimed interest deductions on loans it had incurred as expenditure against its gross income for the year of assessment. On 31 March 2011, … | March 14, 2014 | Courts of South Africa | Financing Transactions, Legality - Legitimacy - Constitutional | Clerical error, Formality, Interest deduction, Loans, Mauritius | financial-transactions legality-legitimacy-constitutional | clerical-error formality interest-deduction loan mauritius |
| France vs. Nestlé water, Feb. 2014, CAA no 11VE03460 | | In the French Nestlé water case, the following arguments were made by the company: The administration, which bears the burden of proof under the provisions of Article 57 of the General Tax Code, of paragraphs 38, 39 and 42 of the Instruction 13 l-7-98 of 23 July 199 8 and case law, does not establish the presumption of indirect transfer of profits abroad that would constitute the payment of a … | February 18, 2014 | Courts of France | Burden of Proof, Sales and Marketing Hubs | Advertising, Bottled water, Burden of proof, Co-branding, Indirect transfer of profits abroad, Marketing, Nestle, Swiss | burden-of-proof sales-and-marketing-hubs | advertising bottled-water burden-of-proof co-branding indirect-transfer-of-profits-abroad marketing nestle swiss |
| Finland vs. Corp. February 2014, Supreme Administrative Court HFD 2014:33 | | A Ltd, which belonged to the Norwegian X Group, owned the entire share capital of B Ltd and had on 18.5.2004 sold it to a Norwegian company in the same group. The Norwegian company had the same day transferred the shares back on to A Ltd. C ASA had also been transferred shares in other companies belonging to the X group. C ASA was listed on the Oslo Stock Exchange … | February 4, 2014 | Courts of Finland | Shares and Dividends, Tax Avoidance Schemes, Transfer Pricing Methods | DCF model, Discounted Cash Flow, Market price of shares, Valuation | shares-and-dividends tax-avoidance-schemes transfer-pricing-methods | dcf-model discounted-cash-flow market-price-of-shares valuation |
| Nederlands vs. Corp, January 2014, Lower Court, Case nr. AWB11/3717, 11/3718, 11/3719, 11/3720, 11/3721 | | The case involved a Dutch mutual insurance company, DutchCo, which paid surpluses from the insurance activity back to the participating members in the form of premium restitution. Prior to 2002, DutchCo reinsured the majority of its risks with external reinsurers via an external reinsurance broker. DutchCo kept a small part of the risks for its own account. In 2001, DutchCo established a subsidiary in Switzerland, Captive, to act as a … | January 17, 2014 | Courts of Netherlands | Commercially Irrational Transactions, Financing Transactions, Non-Recognition and Recharacterisation | Business rationale, Captive insurance, Switzerland, Tax structure | commercially-irrational-transactions financial-transactions non-recognition | business-rationale captive-insurance switzerland tax-structure |
| Switzerland vs Hotel X. SA, Nov. 2013, Courts of Switzerland, Case No. 2C_291 / 2013 / 2C_292 / 2013 | | A loan was granted from a swiss company to its shareholder. The interest rate was fixed at 2,5%. This was found to be a hidden distribution of profit to the shareholder, cf Art. 58 al. 1 letter. b LIFD. Click here for english translation | November 26, 2013 | Courts of Switzerland | Financing Transactions | Hidden distribution of profits, Interest rate, Loans, Shareholder | financial-transactions | hidden-distribution-of-profits interest-rate loan shareholder |
| Italy vs. Solvay s.a., October 2013, Supreme Court, 24005 | | This case is about transfer pricing methods and the use of the comparable uncontrolled price method. The Supreme Court affirmed that regarding the determination of the normal value of goods and services, the transfer pricing provisions refer to article 9 of the CTA, which recognizes, among the methods proposed by the OECD in the Guidelines, the traditional “comparable uncontrolled price method” Click here for translation | October 23, 2013 | Courts of Italy | Transfer Pricing Methods | CUP method, Internal comparables, Normal value | transfer-pricing-methods | cup-method internal-comparables normal-value |
| Switzerland vs. X, Oct. 2013, Federal Supreme Court, Case No. 2C_644-2013 | | X was the principal shareholder and Chairman in the Insurance Agency, Y AG. In 2003, the company went bankrupt, with the bankruptcy proceedings suspended for lack of assets and the company was removed from the commercial register in September 2003. On 12 March 2007, the tax administration initiated a subsequent taxation proceedings against X concerning monetary benefits which it was supposed to have received from Y AG in the years … | October 21, 2013 | Courts of Switzerland | Arm's Length Principle, Burden of Proof | Burden of proof, Hidden distribution of profits, Non-cash benefits | arms_length_principle burden-of-proof | burden-of-proof hidden-distribution-of-profits non-cash-benefits |
| Germany vs. US taxpayer. October 2013, Supreme Tax Court judgment IX R 25/12 | | The Supreme Tax Court has held that the costs incurred by a taxpayer in connection with a tax treaty mutual agreement proceeding are not costs of earning the relevant income, but has left open a possible deduction as “unusual expenses”. A US resident realised a gain on the sale of a share in a GmbH. The German tax office sought to tax the gain, but the taxpayer objected on the … | October 9, 2013 | Courts of Germany | MAP - APA, Shares and Dividends, Tax Treaties | Cost of MAP, Double tax treaty, Sale of a share in a GmbH, Unusual expenses | map-apa shares-and-dividends tax-treaties | cost-of-map double-tax-treaty sale-of-a-share-in-a-gmbh unusual-expenses |
| Denmark vs. Bombardier, October 2013, Administrative Tax Court, SKM2014.53.LSR | | The issue in the case was whether the applicable rates under the cash pool arrangement were on arm’s length, i.e. in accordance with the transfer pricing requirements. The Administrative Tax Court upheld most of the conclusions of the tax authorities. First, the Court found that the tax authorities were allowed to assess an arm’s length rate due to the lack of transfer pricing documentation. Second, the financial service fee of … | October 7, 2013 | Courts of Denmark | Burden of Proof, Financing Transactions, Transfer Pricing Documentation | Cash pool, Financial service fee, Interest rate, Not recharacterization, Transfer pricing documentation | burden-of-proof financial-transactions transfer-pricing-documentation | cash-pool financial-service-fee interest-rate not-recharacterization transfer-pricing-documentation |
| Italy vs SGL CARBON SPA, September 2013, Supreme Court 22010 | | This case is about arm’s length interest on loans, use of the comparable uncontrolled price method (CUP), and use of internal and external comparables. The Supreme Court stated that the relevant market for comparability is that of the seller. The decision was based on the concept of “normal value” as provided by article 9(3)(4) in the Italien regulations. Reference was made to the part of the definition which states: “In … | September 25, 2013 | Courts of Italy | Financing Transactions, Transfer Pricing Methods | CUP method, Interest free loan | financial-transactions transfer-pricing-methods | cup-method interest-free-loan |
| France vs SARL Garnier Choiseul Holding, 17 July 2013, CE No 352989 | | This case is about the importance of proving that the transaction has a real economic purpose, and that it does not artificially seek to achieve tax benefits. The courts also consider the spirit of the law, for example, the purpose of the tax exemptions relating to parent-subsidiary distributions is to involve the parent company in the business of the subsidiary. Click here for translation | July 17, 2013 | Courts of France | Delineation - Substance over Form, General Anti-Avoidance Rules (GAAR) | Avoidance, Delineation, GAAR, Tax schemes | delineation-substance-over-form general-anti-avoidance-rule | avoidance delineation gaar tax-schemes |
| Switzerland vs. Y Holding AG, May 2013, Federal Supreme Court, Case No. 2C_1086/2012 | | A finance company registered in Guernsey was found to have effective place of management in Switzerland due to lack of functional substance in Guernsey. The Swiss Federal Supreme Court stated that the effective place of management is to be distinguished from the activity of the Board of Directors and the General Assembly and from mere administrative activity, such as accounting. Thus, the effective place of management of a company is … | May 16, 2013 | Courts of Switzerland | Financing Transactions, Tax Avoidance Schemes | Effective place of management, Functional substance, Guernsey | financial-transactions tax-avoidance-schemes | effective-place-of-management functional-substance guernsey |
| Germany vs. Corp. April 2013, Supreme Tax Court judgment I R 45/11 | | The Supreme Tax Court has held that internal or other restrictions on the excise of ownership rights do not obviate an association by common shareholding of more than 25%. It has also held that the application of the transfer pricing documentation rules to cross-border transactions only is, while discriminatory, justified by the need to protect tax revenue. A German asset management subsidiary of a Luxembourg investment fund management company paid … | April 10, 2013 | Courts of Germany | Financing Transactions, Transfer Pricing Documentation | Investment fund, Luxembourg, Ownership, Transfer pricing documentation | financial-transactions transfer-pricing-documentation | investment-fund luxembourg ownership transfer-pricing-documentation |
| Czech Republic vs. Goldfein, March 2013, Supreme Administrative Court, No. 1 Afs 99/2012-52 | | The Czech company, Goldfine, submitted a revised tax return lowering the taxable income for the year. The reason being that the German Parent had losses for the year. The Supreme Administrative Court found that the burden of proof related to arm’s length transfer prices, under those circumstances rests with the taxpayer. Losses at the German parent company was not sufficient proof that transfer prices had been incorrect in the original … | March 13, 2013 | Courts of the Czech Republic | Burden of Proof | Burden of proof, revised tax return | burden-of-proof | burden-of-proof revised-tax-return |
| New Zealand vs Alesco New Zealand Ltd March 2013 Court of Appeal NZCA 40 | | In 2003 Alesco NZ bought two other companies in New Zealand. Its Australian owner, Alesco Corporation, funded the acquisitions by advancing the purchase amount of $78 million. In consideration Alesco NZ issued a series of optional convertible notes (OCNs or notes). The notes were non-interest bearing for a fixed term and on maturity the holder was entitled to exercise an option to convert the notes into shares. Between 2003 and 2008 … | March 8, 2013 | Courts of New Zealand | Financing Transactions, General Anti-Avoidance Rules (GAAR), Non-Recognition and Recharacterisation, Shares and Dividends, Tax Avoidance Schemes | Commercial reality, Options, Tax schemes, Zero-coupon | financial-transactions general-anti-avoidance-rule non-recognition shares-and-dividends tax-avoidance-schemes | commercial-reality options tax-schemes zero-coupon |
| Finland vs. Corp. March 2013, Supreme Administrative Court HFD 2013:36 | | A AB purchased manufacturing services of its subsidiary B AS, which had its headquarters in Estonia. The internal pricing of services had since July 2004 been under the net margin method. The price data beside B AS’s realized expenses also included half of the so-called location-savings. On taxation of A AB approved as deductible expenditure only B AS’s actual expenses plus a calculated profit margin. The Supreme Administrative Court stated … | March 3, 2013 | Courts of Finland | Transfer Pricing Methods | Bargaining power, Know-how, Location savings, Manufacturing processes, TNMM | transfer-pricing-methods | bargaining-power know-how location-savings manufacturing-processes tnmm |
| Netherlands vs. Corp, March 2013, Supreme Court, Case no. 11/01985 | | X BV jointly participated in a third party credit arrangement with other group companies. X BV was jointly and severally liable for all the receivables that the creditor had on the other group companies under the credit arrangement, and the recourse (of X BV against the other group companies) that arose from such joint and several liability could not be claimed until the full amount outstanding under the credit arrangement had … | March 1, 2013 | Courts of Netherlands | Financing Transactions | Credit arrangement, Cross-guarantee agreement, Shareholder interests | financial-transactions | credit-arrangement cross-guarantee-agreement shareholder-interests |
| Italy vs Computer Associates SPA, February 2013, Supreme Court no 4927 | | This case is about royalties paid by an Italian company to a US associated company. The tax authorities had challenged the inter-company royalty paid (7%) despite the fact that the taxpayer had provided an economic analysis that justified a higher royalty rate. The Supreme Court ruled in favor of the tax administration. Click here for translation | February 27, 2013 | Courts of Italy | Royalty and License Payments | Royalties, US | royalty-payments | royalties us |
| France vs. Sociétè Nestlé Finance , Feb 2013, CAA no 11PA02914 and 12PA00469 | | In the Nestlé Finance case, a cash pool/treasury activity was transferred to a related Swiss entity. The function had been purely administrative, carried out exclusively for the benefit of parties related to the French company. The French company did not receive any compensation for the transfer of the cash pooling activity. First the Administrative Court concluded that the transfer of an internal administrative function to a foreign entity – even … | February 5, 2013 | Courts of France | Business Restructuring | Administrative function, Burden of proof, Cash pool, Swiss, Transfer of activity, Treasury | business_restructuring | administrative-function burden-of-proof cash-pool swiss transfer-of-activity treasury |
| Germany vs. Corp. December 2012, Federal Tax Court 11.10.2012, I R 75/11 | | A GmbH agreed at year end to accept management charges from its Dutch parent for services performed during the year. The legal question was: Relationship between arm’s-length principle as included in double tax treaties and income correction norms in German tax law. The court rejected a tax office assessment attempt on the basis of a hidden distribution of profits because of a delay in agreeing management charges in writing, saying … | December 10, 2012 | Courts of Germany | Arm's Length Principle, Services and Fees, Tax Treaties | Hidden distribution of profits, Management fee, Netherlands | arms_length_principle services tax-treaties | hidden-distribution-of-profits management-fee netherland |
| France vs. France Immobilier Group, Nov. 2012, CE no 328670 | | In the France Immobilier Group decision, the Court found that the interest rate should be based on the financing conditions the lender could have obtained from a third-party bank. Click here for translation | November 7, 2012 | Courts of France | Financing Transactions | Inter-company loan, Interest rate | financial-transactions | inter-company-loan interest-rate |
| Canada vs. GlaxoSmithKline. October 2012, Supreme Court | | The Canadian Supreme Court ruled in the case of GlaxoSmithKline Inc. regarding the intercompany prices established in purchases of ranitidine, the active ingredient used in the anti-ulcer drug Zantac, from a related party during years 1990 through 1993. The Supreme Court partially reversed an earlier determination by the Tax Court, upholding a determination by the Federal Court of Appeals in its conclusion that if other transactions are relevant in determining … | October 18, 2012 | Courts of Canada | Commodity Transactions, Transfer Pricing Methods | Active ingredient, CUP method, Fair market value, Pharmaceutical, Standing in the shoes of, Trademark | commodity-transactions transfer-pricing-methods | active-ingredient cup-method fair-market-value pharmaceutical standing-in-the-shoes-of trademark |
| Canada vs. McKesson. October 2012. Tax Court | | McKesson is a multinational group involved in wholesale distribution of pharmaceuticals. Its Canadian subsidiary entered into a receivables sales (factoring) agreement with its direct parent, McKesson International Holdings III Sarl in Luxembourg in 2002. Under the agreement, McKesson International Holdings III Sarl agreed to purchase the receivables for about C$460 million and committed to purchasing all the eligible receivables as they arose for the next five years. The price of the receivables … | October 12, 2012 | Courts of Canada | Financing Transactions, General Anti-Avoidance Rules (GAAR), Tax Avoidance Schemes | Accounts receivable, Factoring, Guarantee, Ireland, Luxembourg, Pharmaceutical, Tax avoidance, Tax schemes | financial-transactions general-anti-avoidance-rule tax-avoidance-schemes | accounts-receivable factoring guarantee ireland luxembourg pharmaceutical tax-avoidance tax-schemes |
| Switzerland vs. Finanz AG, Oct. 2012, Federal Supreme Court, Case No 2C_708/2011 | | A company of a Swiss based group maintained a permanent establishment in the Cayman Islands for financing the domestic group companies. Whereas the group companies were able to deduct the interest payments from the taxable profit to their full extent, the interest income, for Swiss tax purposes, was allocated to the permanent establishment in the Cayman Islands, and therefore led to non-taxation of this interest income. By interpreting the legal … | October 5, 2012 | Courts of Switzerland | Financing Transactions, Permanent Establishments | Cash box, Cayman Islands, Group Financing, No activities, No substance, Tax avoidance | financial-transactions permenent-establishments | cash-box cayman-islands group-financing no-activities no-substance tax-avoidance |
| Spain vs. Bicc Cables, July 2012, Supreme Court case nr. 3779/2009 | | In this case an adjustment was made by the tax authorities based on the non-recognition of the tax effects of a series of related-party transactions as part of a leverage acquisition of shares. The Court found that the transaction would not have been agreed by independent companies and accordingly the transaction in question was not performed in accordance with the arm’s length principle. Click here for translation | July 22, 2012 | Courts of Spain | Arm's Length Principle, Non-Recognition and Recharacterisation, Series of Related Transactions | Leveraged acquisition of shares, Recharacterise, Series of related-party transactions | arms_length_principle non-recognition series-of-related-transactions | leverage-acquisition-of-shares recharacterise series-of-related-party-transactions |
| Italy vs Take Two Interactive Italia s.r.l., July 2012, Supreme Court, no 11949/2012 | | In this case the Italien company, T. S.r.l. is entirely controlled by H. S.A., registered in Switzerland, and is part of the American multinational group T., being its only branch in Italy for the exclusive marketing of its software products (games for personal computers, play station, etc.). T. S.r.l. imports these products through T. Ltd (which is also part of the same multinational group and controlled by the same parent … | July 13, 2012 | Courts of Italy | Arm's Length Principle, Burden of Proof | Software, Switzerland, Tax schemes, Year end adjustment | arms_length_principle burden-of-proof | software switzerland tax-schemes year-end-adjustment |
| Switzerland vs. Corp, Juli 2012, Federal Supreme Court, Case No. 2C_834-2011, 2C_836-2011 | | In this ruling, the Swiss Federal Supreme Court comments on the application of the arm’s length principel and the burden of proff in Switzerland. “Services, which have their legal basis in the investment relationship, are to be offset against the taxable income of the company to the extent that they would otherwise not be granted to a third party under the same circumstances or not to the same extent and … | July 6, 2012 | Courts of Switzerland | Arm's Length Principle, Burden of Proof, Commercially Irrational Transactions | Commercial rationality, Hidden distribution of profits, Tax losses | arms_length_principle burden-of-proof commercially-irrational-transactions | commercial-rationality hidden-distribution-of-profits tax-losses |
| South Africa vs. Tradehold Ltd, May 2012, Supreme Court of Appeal, Case No. 132/11 | | Tradehold is an investment holding company, incorporated in South Africa, with its registered office at 36 Stellenberg Road, Parow, Industria, and is listed on the Johannesburg Stock Exchange. During the tax year under consideration, being the year of assessment ended 28 February 2003, Tradehold’s only relevant asset was its 100 per cent shareholding in Tradegro Holdings which, in turn, owned 100 per cent of the shares in Tradegro Limited, a … | May 8, 2012 | Courts of South Africa | Permanent Establishments | Alienation of property, DTA, Effective place of management, Guernsey, Interpretation of "deemed", Luxembourg | permenent-establishments | alienation-of-property dta effective-place-of-management guernsey interpretation-of-deemed luxembourg |
| France vs. Microsoft, Feb 2012, CCA, No 10VE00752 | | In the Microsoft case, the distribution activity of a French subsidiary of an American group was transferred to its Irish sister company. The French subsidiary was then converted into a sales agent of the Irish subsidiary. The Commission rate earned by the French subsidiary was reduced from 25% to 18%. The French tax authorities, taking into account the previous 25% commission rate, considered that it should not have been reduced … | February 16, 2012 | Courts of France | Arm's Length Principle, Burden of Proof, Sales and Marketing Hubs | Business restructuring, Commissioner, Comparability, Converted into a sales agent, Ireland, Microsoft | arms_length_principle burden-of-proof sales-and-marketing-hubs | business-restructuring commissioner comparability converted-into-a-sales-agent ireland microsoft |
| Denmark vs. Swiss Re. February 2012, Supreme Court, SKM2012.92 | | This case concerned the Danish company, Swiss Re, Copenhagen Holding ApS, which was wholly owned by the US company, ERC Life Reinsurance Corporation. In 1999 the group considered transferring the German subsidiary, ERC Frankona Reinsurance Holding GmbH, from the US parent company to the Danish company. The value of the German company was determined to be DKK 7.8 billion. The purchase price was to be settled by the Danish Company … | February 2, 2012 | Courts of Denmark | Financing Transactions | Interest, Loans, Obiter dictum, Statutes of limitation, Zero-coupon | financial-transactions | interest loan obiter-dictum statutes-of-limitation zero-coupon |
| India vs Vodafone International Holdings BV, 2012, Supreme Court | | In the Vodafone case, the Supreme Court of India found that tax planning within the law will be valid as long as it does not amount to a colourable device. | January 15, 2012 | Courts of India | Tax Avoidance Schemes | Colourable device, India, Netherlands, Tax planning, Tax schemes | tax-avoidance-schemes | colourable-device india netherland tax-planning tax-schemes |
| Spain vs. Roche, January 2012, Supreme Court case nr. 1626/2008 | | This case is about the consequences of converting a manufacturer and full-fledged distributor into a toll manufacturer and commissionaire, without actually changing the underlying operations. The Supreme Court decided that the restructured Spanish entity acted as a manufacturing agent that created a PE. The profits attributed to the PE included not only the manufacturing profits but also the profits from the distribution activity on behalf of Roche Vitamins Europe Ltd. in Switzerland. Prior to a business restructuring in … | January 12, 2012 | Courts of Spain | Business Restructuring, Permanent Establishments, Sales and Marketing Hubs | Business restructuring, Commissioner, Contract manufacturing, License agreement, Permanent establishment, Pharmaceutical, Switzerland | business_restructuring permenent-establishments sales-and-marketing-hubs | business-restructuring commissioner contract-manufacturing licence-agreement permanent-establishment pharmaceutical switzerland |
| France vs. Société Office Dépôt France SNC, Jan 12 CAA No | | In the case of Société Office Dépôt France SNC, a US company recharged a portion of audit costs to the French company. The court found that such costs were incurred in the interest of the US company only, and were accordingly not tax deductible in France. DEPOT FRANCE SNC _15_10_2013_CAA 12VE00798″ target=”_blank” rel=”noopener noreferrer”>Click here for translation | January 5, 2012 | Courts of France | Services and Fees | Audit cost, Benefit test | services | audit-cost benefit-test |
| Norge vs. Dell Norge. December 2011, HRD saknr 2011-755 | | The Irish company Dell Products was taxable in Norway for years 2003-2006. The issue was whether Dell Products had a permenent establishment in Norway, cf. Article 5. 5 in the tax treaty between Ireland and Norway from 2000. Dell Products sold PC’s and equipment by a commission agreement in which the Irish company was Principal and the Norwegian company Dell AS was commissioner. Both the companies are part of the Dell group. Dell AS … | December 5, 2011 | Courts of Norway | Permanent Establishments, Sales and Marketing Hubs, Tax Treaties | Commissioner, Conclude contracts on behalf of, Dell, On behalf of, Permanent establishment | permenent-establishments sales-and-marketing-hubs tax-treaties | commissioner conclude-contracts-on-behalf-of dell on-behalf-of permanent-establishment |
| Netherlands vs Corp, 2011, Dutch Supreme Court, Case nr. 08/05323 (10/05161, 10/04588) | | In this case, the Dutch Supreme Court further outlined the Dutch perspective on the distinction between debt and equity in its already infamous judgments on the so-called extreme default risk loan (EDR loan) L sold a securities portfolio to B for EUR 5.3 million against B’s acknowledgement of debt to L for the same amount. The debt was then converted into a 10 year loan with an interest rate of 5% … | November 25, 2011 | Courts of Netherlands | Commercially Irrational Transactions, Financing Transactions, Non-Recognition and Recharacterisation | Business rationale, Equity or Debt/Loan, Extreme Default Risk loan (EDR), Loans, Non-recognition | commercially-irrational-transactions financial-transactions non-recognition | business-rationale equity-or-loan extreme-default-risk-loan loan non-recognition |
| Nederlands vs. Corp, July 2011, Lower Court AWB 08/9105 | | X is the holding company of the so-called A-group, which is a recreation company driven. The activities in X was taking out cancellation insurance. Within the group an Irish company was established. Between X and an insurer, that insurer and a reinsurer and the reinsurer and the Irish company several contracts were concluded with regard to the cancellation activities. The court considers that the tax administration has proved that X has let on un-businesslike … | July 11, 2011 | Courts of Netherlands | Commercially Irrational Transactions, Financing Transactions, Non-Recognition and Recharacterisation | Business rationale, Business reasons, Captive insurance, Ireland | commercially-irrational-transactions financial-transactions non-recognition | business-rationale business-reasons captive-insurance ireland |
| India vs. Fulford (India) Limited, July 2011, Income Tax Appellate Tribunal | | Fulford India Ltd. imported active pharmaceutical ingredients (APIs) from related group companies and sold them in India. The TNM method was used for determening transfer prices. The tax administration found the CUP method to be the most appropriate. Fulford India argued that the CUP method requires stringent comparability and any differences which could materially affect the price in the open market should be taken into consideration. In the pharmaceutical world, … | July 4, 2011 | Courts of India | Transfer Pricing Methods | Active Pharmaceutical Ingredient (API), Contract manufacturing, CUP method, Distribution, Generic ingredience, Manufacturing, Pharmaceutical, TNMM | transfer-pricing-methods | active-pharmaceutical-ingredient-api contract-manufacturing cup-method distribution generic-ingredience manufacturing pharmaceutical tnmm |
| Australia vs SFN 2011 | | The case concerned whether the taxpayer paid more than the arm’s length price for products acquired from overseas related parties so that the Commissioner could apply the transfer pricing rules to adjust the purchase price for income tax purposes. The taxpayer was a member of a global group whose headquarters are in France. The taxpayer bought certain chemicals from group companies overseas, and sold them to unrelated end-users in various … | June 24, 2011 | Courts of Australia | Burden of Proof, Commodity Transactions, Transfer Pricing Methods | Comparability, Global market, TNMM | burden-of-proof commodity-transactions transfer-pricing-methods | comparability global-market tnmm |
| France vs. SOCIETE SOUTIRAN ET COMPAGNIE, March 2011, Supreme Tax Court, Case nr. 342099 | | The French Supreme Tax Court has ruled on 2 March 2011 that the transfer pricing legislation is in conformity with the French Constitution. “The plea of SOCIÉTÉ SOUTIRAN ET COMPAGNIE, that the article 57 of code general of the taxes infringing the rights and freedoms guaranteed by the Constitution must be regarded as not serious” Click here for translation | March 2, 2011 | Courts of France | Arm's Length Principle, Burden of Proof, Legality - Legitimacy - Constitutional | Transfer pricing legislation, Unconstitutional | arms_length_principle burden-of-proof legality-legitimacy-constitutional | transfer-pricing-legislation unconstitutional |
| Czech Republic vs. Corp. February 2011, Supreme Administrative Court, Afs 19/2010-125 | | A Czech company (the lessor) owned real estate and rented it to independent parties. An Austrian related company provided management and consulting services to the lessor The service fees significantly increased each year, although the income of the Czech company and the number of lease contracts were constant in the examined years The tax authorities required that the taxpayer prove the actual provision of the services and their relationship to … | February 27, 2011 | Courts of the Czech Republic | Arm's Length Principle, Burden of Proof, Services and Fees | Benefit test, Burden of proof, Lease of real estate, Service fees | arms_length_principle burden-of-proof services | benefit-test burden-of-proof lease-of-real-estate service-fees |
| Spain vs. Borex, February 2011, National Court case nr. 80-2008 | | A Spanish subsidiary of a UK Group (Borex), which imported, processed and sold the materials to third parties, was transformed into a a contract manufacturer. The Spanish subsidiary signed two separate contracts with the UK parent, one for warehousing and the provision of services and the other in respect of an sales agency. Under the first contract, the minerals purchased by the parent would be stored and processed by the subsidiary, which … | February 9, 2011 | Courts of Spain | Business Restructuring, Permanent Establishments | Contract manufacturing, Fixed place of business, Permanent establishment | business_restructuring permenent-establishments | contract-manufacturing fixed-place-of-business permanent-establishment |
| Czech Republic vs. Corp. January 2011, Supreme Court 7 Afs74-2010-81 | | A lessor rented real estate for a low price to related parties. The tax authorities claimed that the price was too low and required additional income to be taxed with the lessor. The lessor explained that the low rental fees were due to the poor condition of the real estate that was leased to related parties. The tax authorities rejected this explanation and concluded that the taxpayer had not proven … | January 27, 2011 | Courts of the Czech Republic | Burden of Proof | Burden of proof, Lease of real estate, Low rental fees | burden-of-proof | burden-of-proof lease-of-real-estate low-rental-fees |
| France vs. Banca di Roma, Dec. 2010. CAA no 08PA05096 | | In the Banca di Roma case, the Court of Appeals reiterated that the FTA is not allowed to decide whether a business is to be financed through debt or equity. The terms of Article 57 of the French Tax Code (FTC) do not have the purpose, nor the effect, of allowing the administration to assess the ‘normal’ nature of the choice made by a foreign company to finance through a … | December 16, 2010 | Courts of France | Financing Transactions, General Anti-Avoidance Rules (GAAR) | Equity or Debt/Loan, Thin cap | financial-transactions general-anti-avoidance-rule | equity-or-loan thin-cap |
| South Africa vs. NWK LtD, Dec. 2010, Supreme Court of Appeal, Case No. 27/10 | | Over a period of five years, from 1999 to 2003, the respondent, NWK Ltd, claimed deductions from income tax in respect of interest paid on a loan to it by Slab Trading Company (Pty) Ltd (Slab), a subsidiary of First National Bank (FNB), in the sum of R 96.415.776. The deductions were allowed. But in 2003 the appellant, the Commissioner for the South African Revenue Service, issued new assessments disallowing … | December 1, 2010 | Courts of South Africa | Series of Related Transactions, Tax Avoidance Schemes | Disguise true nature of transaction, Interest deduction, Not a genuine contract, Series of transactions | series-of-related-transactions tax-avoidance-schemes | disguise-the-true-nature-of-the-transaction interest-deduction not-a-genuine-contract series-of-transactions |
| Finland vs. Corp. November 2010, Supreme Administrative Court HFD 2010:73 | | A company, which belonged to a Nordic group, had until August 2005, two loans with an independent party outside the group. The interest of the loans was 3.135 to 3.25 percent. The company’s long-term loans amounted to over EUR 36 million and the guarantees granted by the Company for its loans amounted to about 41 million. In August 2005 the financing of the entire group was re organised. A Ltd … | November 4, 2010 | Courts of Finland | Financing Transactions | Average external financing rate, Guarantee, Interest rate, Options realistically available | financial-transactions | average-external-financing-rate guarantee interest-rate options-realistically-available |
| Canada vs. General Electric Capital. November 2010 | | In the case of General Electric Capital, Canada, the issue was if a 1% guarantee fee paid by General Electric Capital Canada Inc. to its AAA-rated US parent company satisfied the arm’s length test. The Canadian tax administration argued that implicit support resulted in General Electric Canada having a AAA credit rating, so that the guarantee provided by the US parent had no value. Taxpayer argued that the 1% guarantee fee did not exceed arm’s length … | November 1, 2010 | Courts of Canada | Financing Transactions | Bargain made at arm's length, Bargaining power, Credit rating, Economic circumstances, Guarantee, Guarantee fee, Implicit support/guarantee, Parent company guarantee | financial-transactions | bargain-made-at-arms-length bargaining-power credit-rating economic-circumstances guarantee guarantee-fee implicit-support parent-company-guarantee |
| France vs. Novartis Groupe France SA, June 2008 and October 2010, CAA no No 06PA02841 and No 09LY02084 | | In the Novartis Groupe France SA case, the court stated that if the tax administration intends to base the transfer pricing approach on prices used between other companies or a profit split, it must first demonstrate that the price used by the related companies does not comply with the arm’s-length principle. A search for comparable transactions must be performed. Click here for translation Se also the later decision of October … | October 29, 2010 | Courts of France | Burden of Proof | Burden of proof, Comparables | burden-of-proof | burden-of-proof comparables |
| India vs. Maruti Suzuki India Ltd. | | Maruti Suzuki India manufactures and sells cars and spare parts. A license agreement had been entered with the group parent for use of licensed information and trademark for the manufacture and sale of the products. Hence, Maruti Suzuki paid royalties to the parent for trademark and technology. The tax administration made an adjustment where the royalty paid for use of the trademark was disallowed and where a reimbursement with mark-up for non-routine advertising, marketing and promotion of … | July 1, 2010 | Courts of India | Intangibles - Goodwill Know-how Patents, Royalty and License Payments | Intangibles, localisation, Manufacturing, Technology license agreements, Trademark, Trademark license agreement | intangibles royalty-payments | intangibles localisation manufacturing technology-license-agreements trademark trademark-licence-agreement |
| Sweden vs. Diligentia, June 2010, Regeringsratten case nr 2483-2485-09 | | Diligentia was the parent company of a Group active in real estate. After a take-over of Diligentia by another Group, Skandia Liv, external loans in Diligentia were terminated and replaced with intra-group loans from the new parent company, Skandia Liv. The new loans had an interest rate of 9,5 percent compared to the interest rates before the take over where the average rate was 4,5 percent (STIBOR added with 0,4 percent). Skandia Liv was a … | June 22, 2010 | Courts of Sweden | Financing Transactions | Implicit support/guarantee, Loans, Unsecured loans | financial-transactions | implicit-support loan unsecured-loans |
| Norway vs. Telecomputing, June 2010, Supreme Court case nr. HR-2010-1072-A | | This case was about the qualification of capital transfers to a US subsidiary – whether the capital should be qualified as a loan (as done by the company) or as a equity contribution (as agrued by the tax administration). The Supreme Court concluded that the capital transfers to the subsidiary as a whole should be classified as loans. The form chosen by the company (loan) had an independent commercial rationale … | June 21, 2010 | Courts of Norway | Commercially Irrational Transactions, Delineation - Substance over Form, Financing Transactions | Commercial rationality, Equity or Debt/Loan, Loans | commercially-irrational-transactions delineation-substance-over-form financial-transactions | commercial-rationality equity-or-loan loan |
| France vs. Zimmer Ltd., March 2010, Conseil D’Etat No. 304715, 308525 | | The French company, Zimmer SAS, distributed products for Zimmer Limited. In 1995 the company was converted into a commissionaire (acting in its own name but on behalf of Zimmer Ltd.). The French tax authorities argued that the commissionaire was taxable as a permanent establishment of the principal, because the commissionaire could bind the principal. The Court ruled that the commissionaire could not bind the principal. Therefore, the French commissionaire could not be … | March 25, 2010 | Courts of France | Business Restructuring, Permanent Establishments, Sales and Marketing Hubs | Commissioner, Converted into a commissionaire, Fixed place of business, Permanent establishment | business_restructuring permenent-establishments sales-and-marketing-hubs | commissioner converted-into-a-commissionaire fixed-place-of-business permanent-establishment |
| France vs. SOCIETE D’ACQUISITIONS IMMOBILIERES, Jan 2010, CE, No. 313868 | | In the Société d’acquisitions immobilières case the interest rate charged to a subsidiary was considered comparable with the interest rate the French entity would receive from a third party bank for an investment similar in terms and risk. The Court decided that the cash advance granted by a sub-subsidiary to its ultimate parent with which it had no business relations could constitute an “abnormal act of management” if the amount … | January 22, 2010 | Courts of France | Financing Transactions, General Anti-Avoidance Doctrines, Non-Recognition and Recharacterisation | Abnormal act of management, Interest rate, Related-party loan | financial-transactions general-anti-avoidance-doctrines non-recognition | abnormal-act-of-management interest-rate related-party-loan |
| US vs. Veritas Software Corporation, December 2009 | | The issue in the VERITAS case involved the calculation of the buy-in payment under VERITAS’ cost sharing arrangement with its Irish affiliate. VERITAS US assigned all of its existing European sales agreements to VERITAS Ireland. Similarly,VERITAS Ireland was given the rights to use the covered intangibles and to use VERITAS US’s trademarks, trade names and service marks in Europe, the Middle East and Africa, and in Asia-Pacific and Japan. In return, VERITAS … | December 10, 2009 | Courts of the US | Cost Contribution Arrangements, Intangibles - Goodwill Know-how Patents, Tax Avoidance Schemes, Valuation - DCF and CUT/CUPs | Aggregation of the intangibles, Akin to a sale, Ireland, Lump-sum payment, Pre-existing intangibles, Synergies, Trade names, Trademark, Valuation | cost-contribution-arrangements intangibles tax-avoidance-schemes discounted_cash_flow_valuation | aggregation-of-the-intangibles akin-to-a-sale ireland lump-sum-payment pre-existing-intangibles synergies trade-names trademark valuation |
| US vs Xilinx Inc, May 27, 2009, Court of Appeal | | In a decision the IRS determined that Xilinx should have allocated stock option costs for foreign subsidiary research and development employees as part of its Section 482-7 cost-sharing agreement calculation. The United States Tax Court overruled the IRS, finding that in an arm’s-length situation, unrelated parties would not allocate employee stock option costs in the way determined by the IRS. The Court of Appeals later in 2009 overruled the opinion … | May 27, 2009 | Courts of the US | Cost Contribution Arrangements | Cost sharing agreement, research and development, Stock option costs, Xilinx | cost-contribution-arrangements | cost-sharing-agreement research-and-development stock-option-costs xilinx |
| UK vs. DSG Retail (Dixon case), Tax Tribunal, | | This case concerns the sale of extended warranties to third-party customers of Dixons, a large retail chain in the UK selling white goods and home electrical products. The DSG group captive (re)insurer in the Isle of Man (DISL) insured these extended warranties for DSG’s UK customers. Until 1997 this was structured via a third-party insurer (Cornhill) that reinsured 95% on to DISL. From 1997 onwards the warranties were offered as … | March 31, 2009 | Courts of the UK | Arm's Length Principle, Financing Transactions, Transfer Pricing Methods | Bargaining power, Benchmark, Comparability, Insurance, Isle of Man, Know-how, Tested party, Warranty | arms_length_principle financial-transactions transfer-pricing-methods | bargaining-power benchmark comparability insurance isle-of-man know-how tested-party warranty |
| India vs. Gemplus India Pvt. Ltd. March 2009, ITA case no. 352 | | Gemplus India Pvt. Ltd. is a part of the Gemplus group, engaged in providing smart card solutions for the telecommunications industry, financial services industry and other e-businesses. The company entered into a intra group management services agreement for receipt of services in marketing and sales support, customer service support, finance, accounting and administration support and legal support. The tax administration found there was no clear proof that such services had … | March 30, 2009 | Courts of India | Royalty and License Payments, Services and Fees | Benefit test, Intra-group services, Service cost | royalty-payments services | benefit-test intra-group-services service-cost |
| Australia vs. Roche July 2008, Administrative Appeals Tribunal NT 2005/7 & 56-65 | | The Applicant is an Australian subsidiary of the Roche Group, the parent company of which is a resident of Switzerland. Roche is a major pharmaceutical corporation with integrated operations in many countries. It carries on research and development, manufacturing, marketing, selling and distribution of pharmaceuticals, vitamins, chemicals, diagnostic and other products. During the 1993 to 2003 income years (the relevant income years) the Applicant carried on business in Australia marketing, … | July 24, 2008 | Courts of Australia | Transfer Pricing Methods | Internal comparables, Pharmaceutical, RPM method, Singapore, Switzerland, TNMM | transfer-pricing-methods | internal-comparables pharmaceutical rpm-method singapore switzerland tnmm |
| Norway vs. Cytec. September 2007, LRD 2007/1440 | | This case is about business restructuring and transfer of intangibles – customer portfolio, technology, trademarks and goodwill. Cytec Norge was originally a full-fledged manufacturer that was changed into a toll manufacturer. The customer portfolio, technology, trademarks and goodwill were transferred to the related entity, Cytec Netherlands, free of charge. The court found that Cytec Norge AS had held intangibles of considerable value prior to the business restructuring in 1999, and that the Norwegian … | September 26, 2007 | Courts of Norway | Business Restructuring, Intangibles - Goodwill Know-how Patents | Arm's length remuneration, Business restructuring, Converted into a toll manufacturer, Intangibles, R&D, Tax assessment | business_restructuring intangibles | arms-length-remuneration business-restructuring converted-into-a-toll-manufacturer intangibles rd tax-assessment |
| Norway vs. Statoil Angola, 2007, Supreme Court, No. RT 2007-1025 | | Two inter-company loans were provided to Statoil Angola by it’s Norwegian parent company, Statoil Norway ASA, and a Belgian sister company, Statoil Belgium (SCC). Statoil Angola only had the financial capacity to borrow an amount equal to the loan from Statoil Belgium. Hence, no interest was paid on the loan from Statoil Norway. The tax authorities divided Statoil Angola’s borrowing capacity between the two loans and imputed interest payments on … | June 26, 2007 | Courts of Norway | Arm's Length Principle, Financing Transactions | borrowing capacity, Combined transactions, Equity or Debt/Loan, Inter-company loan, Interest free loan, Requalification, Statoil | arms_length_principle financial-transactions | borrowing-capacity combined-transactions equity-or-loan inter-company-loan interest-free-loan requalification statoil |
| Netherlands vs Corp, May 2007, District Court, Case nr. 05/1352 | | IP sale-and-license-back arrangement. Initially A BV developed, manufactured and marketed sporting shoes. Then in January 1994 a Sale and license-back arrangement of trademark B was entered with B BV whereby the trademark was transferred to B BV. Trademark B was also the tradename of B BV. In July 1994, B BV moved to the Dutch Antilles. In 1999 the royalty for use of the trademark was increased from fl. 2 per pair of shoes … | May 4, 2007 | Courts of Netherlands | Business Restructuring, Commercially Irrational Transactions, Delineation - Substance over Form, Intangibles - Goodwill Know-how Patents, Non-Recognition and Recharacterisation, Royalty and License Payments | Business rationale, Business reasons, Disregarding the transaction, Dutch Antilles, No control over risk, Sale-and-lease-back, Trademark | business_restructuring commercially-irrational-transactions delineation-substance-over-form intangibles non-recognition royalty-payments | business-rationale business-reasons disregarding-the-transaction dutch-antilles no-control-over-risk sale-and-lease-back trademark |
| South Africa vs. BP Southern Africa (Pty) Ltd, March 2007, Supreme Court of Appeal, Case No 60 / 06, 2007-07 | | the Supreme Court of Appeal held that royalty payments are tax deductible in terms of s 11(a) of the Income Tax Act. It accordingly upheld an appeal by BP Southern Africa (Pty) Ltd against a judgment of the Income Tax Special Court. During 1997 BP Southern Africa (Pty) Ltd concluded a written trade mark licence agreement with its parent company BP plc in terms whereof it was granted authorisation to … | March 13, 2007 | Courts of South Africa | Royalty and License Payments | BP, Deduction, Royalty fee payments, Trademark license agreement | royalty-payments | bp deduction royalty-fee-payments trademark-licence-agreement |
| Netherland vs. X BV, March 2007, District Court of Arnhem, Case No ECLI:NL:RBARN:2007:BA0339 | | X BV in the Netherlands was a wholesaler in garden related (gift) articles. Customers are located in the Netherlands and abroad (especially in Western Europe, the United States and Canada). Procurement of the products is mainly done in China. Delivery of the products is made directly by the producer to [X] BV or to its other clients. As compensation for procurement activities performed by the [X Limited] in Hong Kong, … | March 9, 2007 | Courts of Netherlands | Transfer Pricing Methods | Cost plus, CUP method, Hong Kong, Procurement activities | transfer-pricing-methods | cost-plus cup-method hong-kong procurement-activities |
| Canada vs. Avotus Corporation. November 2006 | | The Tax Court of Canada upheld the right of Avotus Corporation to deduct from its Canadian income losses incurred by its subsidiary in Puerto Rico. The Tax Court found that the Puerto Rican subsidiary was Avotus’s agent under a validly executed agency agreement, rejecting the CRA’s claim that the written agreement was unacceptable because the subsidiary’s conduct was inconsistent with that of an agent. | November 21, 2006 | Courts of Canada | Delineation - Substance over Form | Agent, Conduct was inconsistent, Written agreement | delineation-substance-over-form | agent conduct-was-inconsistent written-agreement |
| France vs. SA Cap Gemini, Nov. 2005, CE, No 266436 | | In Cap Gemini, the Court concluded that the tax administration did not demonstrate the “indirect transfer of benefit” in the absence of a comparability study. The transaction in question consisted of a licence of the Cap Gemini trademark and logo. The French subsidiaries were charged with a 4% royalty, whereas European and American subsidiaries were charged no or lower royalty. The court found that the value of a trademark and … | November 7, 2005 | Courts of France | Burden of Proof, Royalty and License Payments | Burden of proof, Comparability study, License of trademark, Royalty | burden-of-proof royalty-payments | burden-of-proof comparability-study license-of-trademark royalty |
| US vs. Xilinex Inc, August 2005 | | In a decision the IRS found that Xilinx should have allocated stock option costs for foreign subsidiary research and development employees as part of its Section 482-7 cost-sharing agreement calculation. In this decision, the United States Tax Court overruled the IRS, finding that in an arm’s-length situation, unrelated parties would not allocate employee stock option costs in the way determined by the IRS. The US Court of Appeals later in … | August 30, 2005 | Courts of the US | Cost Contribution Arrangements | Cost sharing agreement, Stock option costs | cost-contribution-arrangements | cost-sharing-agreement stock-option-costs |
| South Africa vs. B SA Limited, Aug 2005, Tax Court, Case No. 11454 | | B SA Limited was incorporated in South Africa 9 May 1924. C plc is the controlling shareholder of the company. On 24 October 1979 B SA Limited amended paragraph 1 of its memorandum of association by adding the following to it: The corporate name “B SA Limited” is adopted and used by permission of (C) Limited. On withdrawal of that permission B SA Limited will cease to use such name … | August 25, 2005 | Courts of South Africa | Royalty and License Payments | Capital in nature, Disallowed deduction, License, Trademark | royalty-payments | capital-in-nature disallowed-deduction licence trademark |
| India vs Azadi Bachao Andolan, 2003, Supreme Court | | In this case the Court held that while a “colourable device” could result in the transaction being considered a sham, that did not mean that tax planning within the law will not be permitted. | October 7, 2003 | Courts of India | Tax Avoidance Schemes | Colourable device, Sham transactions, Tax planning, Tax schemes | tax-avoidance-schemes | colourable-device sham-transactions tax-planning tax-schemes |
| Columbia vs. Corp, Aug. 2003, The Constitutional Court, Case No. C-690-03 | | The Constitutional Court of Columbia rules as follows: “Article 260-6. Low tax Jurisdictions. Unless proven otherwise, it is presumed that transactions between residents or domiciled in Colombia and residents or domiciled in countries or jurisdictions of lower taxation in the matter of income tax, are transactions between economic related parties or related parties in which the prices and amounts of the considerations are not agreed according to those that would … | August 12, 2003 | Courts of Columbia | Arm's Length Principle | Low tax jursidiction | arms_length_principle | low-tax-jursidiction |
| US vs. Boing Co. March 2003, Supreme Court of Appeals | | Boeing appealed and IRS ruling that it had improperly applied the combined taxable income (CTI) method of transfer pricing by including research and development costs that did not pertain directly to the income in question. The U.S. Supreme Court upheld the IRS position, affirming the Court of Appeals decision in favor if the IRS. | March 4, 2003 | Courts of the US | Arm's Length Principle, Transfer Pricing Methods | CTI, Research and development costs | arms_length_principle transfer-pricing-methods | cti research-and-development-costs |
| US vs Seagate Technology, December 2000, United States Tax Court | | The IRS ruled that Seagate should have included the cost of employee stock options in the net revenue calculation associated with its cost-sharing agreement with its foreign subsidiaries. Seagate appealed the ruling on the grounds that the IRS was not aware of actual arm’s length circumstances relating to the employee stock option compensation. In this case, the United States Tax Court found in favor of the IRS. | December 22, 2002 | Courts of the US | Arm's Length Principle, Cost Contribution Arrangements | Cost sharing agreement, Employee stock options | arms_length_principle cost-contribution-arrangements | cost-sharing-agreement employee-stock-options |
| France Lindt & Sprungli, December 2002, CE No 97BX01746 | | In the case of Lindt & Sprungli, the Court approved the position taken by the FTA, even though the FTA did not support its position by reference to independent comparable data. The FTA based the case on facts and circumstances. Click here for translation | December 4, 2002 | Courts of France | Arm's Length Principle | Comparable, Facts and circumstances | arms_length_principle | comparable facts-and-circumstances |
| US vs. DHL. April 2002, U.S. Court of Appeals | | When DHL sold the “DHL” trademark to DHL International, the IRS disagreed with DHL’s evaluation of the arms-length price of the intellectual property and used its authority under Section 482 to reallocate income and impose penalties. DHL appealed the IRS ruling and the tax court upheld the IRS allocation to DHL. In this decision the U.S. Court of Appeals for the Ninth Circuit affirmed the tax court’s application of Section … | April 11, 2002 | Courts of the US | Financing Transactions, Intangibles - Goodwill Know-how Patents, Valuation - DCF and CUT/CUPs | Intellectual property, Sale of the trademark, Trademark, Valuation | financial-transactions intangibles discounted_cash_flow_valuation | intellectual-property sale-of-the-trademark trademark valuation |
| France vs. SA Rocadis, September 2001, CE | | In the Rocadis case the French taxpayer argued that a related Japanese company was not a routine distributor, but a co-entrepreneur. The court however considered that evidence for such as statement was not provided, and the transfer pricing adjustment was upheld by the court. Click here for translation | September 26, 2001 | Courts of France | Arm's Length Principle, Burden of Proof | Burden of proof, Routine distributor | arms_length_principle burden-of-proof | burden-of-proof routine-distributor |
| US vs. GlaxoSmithKlein, July 2001, United State Tax Court | | This joint application to allow depositions found Glaxo and the IRS jointly petitioning the tax court for permission to depose two former Glaxo executives in anticipation of an evential Section 482 challenge to Glaxo’s taxable revenue calculations. The Court granted the joint application. The decision is interesting as it pertains to the submission of evidence in disputes with the IRS. | July 5, 2001 | Courts of the US | Burden of Proof, Legality - Legitimacy - Constitutional | Submission of evidence | burden-of-proof legality-legitimacy-constitutional | submission-of-evidence |
| US vs. Bankers Trust. September 2000 | | This decision did not deal directly with transfer pricing, but it describes the limits on IRS authority to regulate beyond statuatory powers. | September 20, 2000 | Courts of the US | Legality - Legitimacy - Constitutional | Limits on IRS authority, statuatory powers | legality-legitimacy-constitutional | limits-on-irs-authority statuatory-powers |
| US vs. BMC. January 1999 | | The IRS filed a summons to get BMC’s computer source code as part of a transfer pricing audit, but in this decision, the court ruled in favor of BMC. | January 8, 1999 | Courts of the US | Burden of Proof, Legality - Legitimacy - Constitutional, Transfer Pricing Documentation | Documentation denied, Source code | burden-of-proof legality-legitimacy-constitutional transfer-pricing-documentation | documentation-denied source-code |
| US vs Union Carbide, June 1998 | | Union Carbide challenged and IRS ruling regarding its commission expenses, but the United States Tax Court granted the IRS’ cross-motion for partial summary judgement, ruling that the calculation was made correctly and that the temporary regulations on which basis the IRS had acted were valid. | June 15, 1998 | Courts of the US | Arm's Length Principle | Commission expenses | arms_length_principle | commission-expenses |
| France vs. Soladi, April 1998, CAA No. 94NC00880 | | In the Soladi case the court deemed it to be an “abnormal act of management” to provide an explicit financial guarantee free of charge, unless direct actual benefit for the entity providing this support can be justified. Click here for translation | April 30, 1998 | Courts of France | Financing Transactions, General Anti-Avoidance Doctrines | Abnormal act of management, Financial guarantee | financial-transactions general-anti-avoidance-doctrines | abnormal-act-of-management financial-guarantee |
| France vs. SA Bossard Consultants, March 1998, Adm. Court, no 96pa00673N° 96PA00673 | | A subsidiary company, which paid royalties for a licence of a trademark to its parent company, could not deduct part of the sums paid as a temporary increase of the royalties by one point because it could not justify the benefit from the use of the trademark. Click here for translation | March 17, 1998 | Courts of France | Royalty and License Payments | Benefit test, License, Royalty, Trademark | royalty-payments | benefit-test licence royalty trademark |
| US vs. Microsoft Corp. February 1998 | | Microsoft appealed an IRS ruling, which had disallowed the use of the profit-split method to recalculate Microsoft’s taxable income. In this decision, the United States Tax Court found in Microsoft’s favor, granting the motion for summary judgment. | February 10, 1998 | Courts of the US | Transfer Pricing Methods | Profit split method | transfer-pricing-methods | profit-split-method |
| France vs SA Borsumij Whery France, Feb 1997, Adm Court of appeal, No 94PA00511 | | The administration found that the reimbursement of a charge represented a transfer of profits abroad where the French company has not substantiated the benefit of the services which the French company could perform itself. The submission of incomplete documents was deemed to be insufficient. This analysis was confirmed by the French Supreme Tax Court. Click here for translation | February 11, 1997 | Courts of France | Services and Fees, Transfer Pricing Documentation | Benefit test, Services, Transfer of profits abroad | services transfer-pricing-documentation | benefit-test services transfer-of-profits-abroad |
| US vs. Medieval Attractions, 1996 October, | | The United States Tax Court sustained the IRS determination that there were no arm’s-length business reasons why payments would have been made for the intangible property in question and therefore refused to allow those expenses to be included in the Section 482 calculation of net taxable income. | October 9, 1996 | Courts of the US | Commercially Irrational Transactions, Intangibles - Goodwill Know-how Patents, Non-Recognition and Recharacterisation | Business reasons, Intangibles | commercially-irrational-transactions intangibles non-recognition | business-reasons intangibles |
| France vs. Montlaur Sakakini, Oct 1995, CAA, No 95LY00427 | | In the case of Montlaur Sakakini the court concluded that the arm’s length interest rate is the rate that the lender could have obtained from a third party bank. The question of “ACTE ANORMAL DE GESTION” was also addressed in this case. Click here for translation . . . Click here for translation | October 22, 1995 | Courts of France | Financing Transactions, General Anti-Avoidance Doctrines | Abnormal act of management, Inter-company loan, Interest rate | financial-transactions general-anti-avoidance-doctrines | abnormal-act-of-management inter-company-loan interest-rate |
| US vs International Paper. April 1995 | | In this decision, the United States Court of Federal Claims granted partial summary judgement in favor of International Paper in their case petition for refund of taxes assessed by the IRS based on an incorrect determination of net taxable income. | April 27, 1995 | Courts of the US | Transfer Pricing Methods | | transfer-pricing-methods | |
| France vs. PHARMATIQUE INDUSTRIE, July 1994, CAA, No 92PA01392 | | The Pharmatique Industrie case shows the high comparability standard required by the courts of France. The tax authorities used five similar products, distributed by three companies operating in the same pharmaceutical sector, as comparables in a transfer pricing dispute. Click here for translation | July 12, 1994 | Courts of France | Transfer Pricing Methods | Comparable uncontrolled transaction, Pharmaceutical, TNMM | transfer-pricing-methods | comparable-uncontrolled-transaction pharmaceutical tnmm |
| US vs. National Semiconductor, May 1994, United States Tax Court | | National Semiconductor appealed an IRS ruling pertaining the allocation of income from its Asian subsidiaries. In this decision, the United States Tax Court upheld the IRS ruling. | May 2, 1994 | Courts of the US | Arm's Length Principle | Allocation of income | arms_length_principle | allocation-of-income |
| France vs Baker International, April 1994, CAA, no 92BX01109 | | In Baker International the court concluded that if interest is not charged in respect of deferrals of payments granted to a related company, it is considered either an abnormal act of management or is subject to Section 57 of the tax code. Click here for translation | April 6, 1994 | Courts of France | Financing Transactions, General Anti-Avoidance Doctrines | Abnormal act of management, Deferrals of payments, Interest free loan | financial-transactions general-anti-avoidance-doctrines | abnormal-act-of-management deferrals-of-payments interest-free-loan |
| France vs Vansthal International, March 1993, CAA, No 92NC00227 | | In the case of Vansthal France the Court disallowed a transfer pricing policy under which a 20%-40% mark-up was added to payments to a Swiss entity because in its capacity as a billing centre the Swiss entity assumed no risk. Click here for translation | March 11, 1993 | Courts of France | Sales and Marketing Hubs, Services and Fees | Benefit test, Billing center, Swiss | sales-and-marketing-hubs services | benefit-test billing-center swiss |
| US vs. Dow, January 1993, US Court of Appeals | | Dow Corning appealed an IRS ruling on the argument that the Treasury Regulations on which the IRS ruling was based were invalid. In this decision, the US Court of Appeals for the Federal Circuit upheld the US Claims Court’s summary judgement ruling in favor of the IRS. | January 14, 1993 | Courts of the US | Arm's Length Principle | Treasury regulations | arms_length_principle | treasury-regulations |
| France vs Ford, March 1992, Conseil d’Etat statuant au contentieux, No 87947 | | The court determined that a transaction must be valued based on facts known (or facts that could/should have reasonably been known) at the time of the contract. Use of hindsight is not permitted. Click here for translation | March 4, 1992 | Courts of France | Arm's Length Principle | Hindsight | arms_length_principle | hindsight |
| France vs. Carrefour, Feb. 1992, CE no 81690/82782 | | In the French Carrefour case, the French Supreme Court considered as arm’s length a rate of 0.25% for for a loan guarantee. The remuneration should be commensurate with the risk incurred as well as with the market value of this service, irrespective of the actual cost. Click here for translation | February 17, 1992 | Courts of France | Financing Transactions | Financial guarantee, loan guarantee, Risk incurred | financial-transactions | financial-guarantee loan-guarantee risk-incurred |
| US vs. Computervision. April 1991 | | Computervision used a domestic international sales corporation (DISC) for export sales of its products and included those transaction costs in its combined taxable income (CTI) calculation. In this decision, the US Tax court upheld the IRS ruling to disallow inclusion of export promotion expenses in the calculation of taxable net income. | April 16, 1991 | Courts of the US | Arm's Length Principle | Combined Taxable Income (CTI) | arms_length_principle | combined-taxable-income-cti |
| US vs. Sundstrand Corp, Feb. 1991, United States Tax Court | | Sunstrand licenced technology to its Singapore-based subsidiary, SunPac. The United States Tax Court ruled that the amounts paid by Sunstrand to SunPac did not constitute and arm’s-length consideration under Section 482, but also that the IRS overstepped its authority in calculating taxable net income. The Court also eliminated interest penalties imposed by the IRS. | February 19, 1991 | Courts of the US | Legality - Legitimacy - Constitutional, Royalty and License Payments | IRS overstepped its authority, License of technology, Limits on IRS authority, Royalty, Singapore | legality-legitimacy-constitutional royalty-payments | irs-overstepped-its-authority licenced-technology limits-on-irs-authority royalty singapore |
| France vs. Reynolds Tobacco, Nov 1990, CAA | | In Reynolds Tobacco, the 2%-3% commission received was considered arm’s-length, even though competitors received 8% for providing similar services. The services provided by the French company were sufficiently different, and this justified the lower commission rate charged. Click here for translation | November 20, 1990 | Courts of France | Arm's Length Principle, Sales and Marketing Hubs, Services and Fees | Comparability, Sales commissions | arms_length_principle sales-and-marketing-hubs services | comparability sales-commissions |
| France vs. Caterpillar, October 1989, CE No 65009 | | In Caterpillar, a 5% royalty was found to be an arm’s-length rate for the manufacturing and assembling operations. The court did not accept that there should be different rates for the two different activities. Click here for translation | October 25, 1989 | Courts of France | Royalty and License Payments | Assembling, Manufacturing, Royalty | royalty-payments | assembling manufacturing royalty |
| Georgia Pacific Corp vs. United States Plywood Corp, May 1970, | | This case is about valuation (not transfer pricing as such) and is commonly referred to in international valuation practice: In this decisions, the following 15 factors were relied upon to determine the type of monetary payments that would compensate for a patent infringement: 1. The royalties received by the licensor for licensing the intangible, proving or tending to prove an established royalty. 2. The rates paid by the licensee for … | May 15, 1970 | Courts of the US | Royalty and License Payments, Valuation - DCF and CUT/CUPs | Fair market value, License of intangibles, Royalty, Valuation | royalty-payments discounted_cash_flow_valuation | fair-market-value licensing-of-intangible royalty valuation |
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