Transfer Pricing Case Law

Case NamePDFDescriptionDateCourtCatagoriesKeywords
Denmark vs. Danish Production A/S, Feb 2018, Tax Tribunal, SKM2018.62.LSRIn 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, 2018Transfer Pricing Documentation, Transfer Pricing Methods, , , 2018-02-12 07:32:39
India vs. Vodafone India Services Pvt Ltd, Jan 2018, ITA No.565 Ahd 2017The 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, 2018Delineation - Substance over Form, Shares and Dividends, Tax Avoidance Schemes, , , , 2018-01-24 17:53:53
Norway vs. Exxonmobil Production Norway Inc., January 2018, Lagsmanret no LB-2016-160306An 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, 2018Arm's Length Principle, Financing Transactions, , , , , , , , , 2018-01-22 21:08:36
Sweden vs. Absolut Company AB, Jan 2018, Administrative Court, No. 1610-16In 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, 2018Transfer Pricing Methods, , , , , , 2018-01-16 21:55:25
Europe vs Hamamatsu, Dec 2017, European Court of Justice, Case No C-529-16The 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, 2017Arm's Length Principle, 2017-12-20 07:17:23
European Commission vs. Netherlands and IKEA, Dec. 2017The 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, 2017EU State Aid, , , , , , 2017-12-18 19:00:47
US vs Coca Cola, Dec. 2017, US Tax Court, 149 T.C. No. 21Coca 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, 2017Royalty and License Payments, , , , 2017-12-14 21:31:05
Spain vs. Afinsa and Filatelico, Nov. 2017, Supreme Court, Case no 4008/2017The 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, 2017Arm's Length Principle, , 2017-11-23 17:44:39
India vs Google, Oct. 2017, Income Tax Appellate TribunalGoogle 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, 2017Royalty and License Payments, Tax Avoidance Schemes, , , , 2017-10-30 21:09:29
Netherland vs. A BV, October 2017, Lower Court, case no 2017: 5965A 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, 2017Business Restructuring, , 2017-10-27 16:34:33
European Commission vs. UK, October 2017, State aid, CFCThe 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, 2017EU State Aid, Financing Transactions, , , 2017-10-26 18:21:10
Norway vs. A AS, October 2017, Tax Tribunal, NS 71/2017A 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, 2017Shares and Dividends, Valuation - DCF and CUT/CUPs, , , , , , 2017-10-24 16:22:52
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, 2017EU State Aid, Royalty and License Payments, , , , , , , , 2017-10-04 11:29:34
UK vs. BNP PARIBAS, September 2017, FIRST-TIER TRIBUNAL TAX CHAMBER, TC05941The 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, 2017Delineation - Substance over Form, Financing Transactions, Non-Recognition and Recharacterisation, Shares and Dividends, Tax Avoidance Schemes, , , 2017-09-20 08:27:23
Finland vs Corp, September 2017, HFD:2017:145Ruling 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, 2017Services and Fees, , 2017-09-13 14:49:58
Finland vs Corp, Sep. 2017, HFD No. 2017-146Ruling 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, 2017Services and Fees2017-09-13 14:08:37
Canada vs Cameco Corp, Aug 2017, Federal Court, Case No T-856-15In 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, 2017Legality - Legitimacy - Constitutional, , , , , 2017-08-10 11:40:24
Canada vs. Burlington Resources Finance Company, Aug 2017, case NO. TCC 144This 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, 2017Financing Transactions, Legality - Legitimacy - Constitutional, 2017-08-03 10:48:06
US vs EATON-CORPORATION, July 2017, US Tax Court, TC memo 2017-147The 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, 2017Legality - Legitimacy - Constitutional, MAP - APA, , 2017-07-26 19:08:54
France vs. Havas, July 2017, CE, No 400644The 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, 2017Intangibles - Goodwill Know-how Patents, Shares and Dividends, Valuation - DCF and CUT/CUPs, 2017-07-12 23:46:28
France vs. Google, July 2017, Administrative CourtIn 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, 2017Permanent Establishments, Tax Avoidance Schemes, 2017-07-12 20:21:34
South Africa vs XYZ Corp, 30 June 2017, Tax Court, Case No. TC-2017-06 – TCIT 13065The 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, 2017Commodity Transactions, Sales and Marketing Hubs, Tax Avoidance Schemes, , , , , , , , , 2017-06-30 14:48:12
Sweden vs S BV, 16 June 2017, Administrative Court, case number 2385-2390-16In 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, 2017Permanent Establishments, Shares and Dividends, , , 2017-06-16 13:12:40
Israel vs. Gteko Ltd (Microsoft), June 2017, District CourtIn 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, 2017Business Restructuring, Intangibles - Goodwill Know-how Patents, , , , , 2017-06-06 09:01:25
Norway vs Hess Norge AS, May 2017, Court of AppealIn 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, 2017Commercially Irrational Transactions, Financing Transactions, , , , 2017-05-30 20:10:47
India vs Formula One World Championship Ltd, April 2017, India’s Supreme CourtIndia’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, 2017Permanent Establishments, , , 2017-04-24 11:15:57
Australia vs Chevron, 21 April 2017, Federal Court 2017 FCAFC 62This 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, 2017Financing Transactions, Tax Avoidance Schemes, , , 2017-04-21 20:37:50
European Commission vs. The Netherlands and Starbucks, March 2017 and October 2015, State Aid InvestigationThe European Commission’s investigation on granting of selective tax advantages to Starbucks BV, cf. EU state aid rules.      March 29, 2017EU State Aid, Tax Avoidance Schemes, , , , , , , 2017-03-29 15:23:38
US vs. Amazon, March 2017, US Tax CourtIn 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, 2017Cost Contribution Arrangements, Intangibles - Goodwill Know-how Patents, Tax Avoidance Schemes, Transfer Pricing Methods, Valuation - DCF and CUT/CUPs, , , , , , , , , , 2017-03-23 11:48:26
Denmark vs. Corp, March 2017, Tax Tribunal, SKM2017.187In 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, 2017Intangibles - Goodwill Know-how Patents, Transfer Pricing Documentation, Transfer Pricing Methods, , 2017-03-13 11:43:23
New Zealand vs Honk Land Trustee Limited, 10 March 2017, Court of AppealThe 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, 2017General Anti-Avoidance Rules (GAAR), Services and Fees, Tax Avoidance Schemes, , , 2017-03-10 13:38:26
Canada vs Sifto Canada Corp, March 2017, Tax Court, Case No TCC 37The 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, 2017Legality - Legitimacy - Constitutional, MAP - APA, Tax Treaties, , , 2017-03-10 10:22:09
Spain vs McDonald’s, March 2017, Spanish Tribunal Supremo, Case no 961-2017This 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, 2017Financing Transactions, Legality - Legitimacy - Constitutional, , , , 2017-03-02 17:33:12
UK vs. Ladbroke Group, February 2017, case nr. UT/2016/0012 & 0013Tax 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, 2017Financing Transactions, General Anti-Avoidance Rules (GAAR), Shares and Dividends, Tax Avoidance Schemes, , , , 2017-02-26 14:55:36
Venezuela vs. Brightstar, 23. Feb 2017, Tax Court of CaracasVenezuela vs. Brightstar, 23. Feb 2017, Tax Court of CaracasThe 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, 2017Transfer Pricing Methods, 2017-02-23 16:32:58
Spain vs. Schwepps (Citresa), February 2017, Spanish Supreme Court, case nr. 293/2017The 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, 2017Transfer Pricing Methods, , , , , , 2017-02-21 11:32:30
Venezuela vs. Sodexho, 15. Dec 2016, Tax Court of CaracasVenezuela vs. Sodexho, 15. Dec 2016, Tax Court of CaracasSodexho 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, 2016Financing Transactions, , 2016-12-15 16:17:51
Denmark vs. Corp, December 2016, Tax Tribunal, SKM2017.115The 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, 2016Burden of Proof, Transfer Pricing Documentation, 2016-12-15 12:27:00
Switzerland vs. A GmbH, 7 Dec. 2016, Administrative Court, Case No. SB.2016.00008The 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, 2016Financing Transactions, , , , , , 2016-12-07 09:19:07
US-vs-Analog-Devices-Subsidiaries-Nov-22-2016-United-State-Tax-Court-147-TC-no-15In 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, 2016Arm's Length Principle, Shares and Dividends, , 2016-11-22 19:55:11
Spain vs. ZERAIM IBÉRICA, SA, Oct. 2016, Spanish Supreme Court, Case no 4675-2016In 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, 2016Legality - Legitimacy - Constitutional, Transfer Pricing Methods, , 2016-10-19 17:37:39
Norway vs. IKEA Handel og Ejendom, October 2016, HRD 2016-722In 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, 2016Commercially Irrational Transactions, Financing Transactions, General Anti-Avoidance Doctrines, General Anti-Avoidance Rules (GAAR), Non-Recognition and Recharacterisation, Shares and Dividends, Tax Avoidance Schemes, , , , , 2016-10-18 20:56:53
Netherlands vs Corp, October 2016, Supreme Court 16/01370In 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, 2016Financing Transactions, General Anti-Avoidance Rules (GAAR), 2016-10-14 08:24:25
Spain vs. CÍTRICOS Y REFRESCANTES, S.A., Oct. 2016The 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, 2016Arm's Length Principle, , 2016-10-11 17:26:41
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, 2016Financing Transactions, General Anti-Avoidance Doctrines, Non-Recognition and Recharacterisation, Series of Related Transactions, Tax Avoidance Schemes, , , , , , 2016-10-05 20:50:29
European Commission has opened investigation into Luxembourg’s tax treatment of the GDF Suez group (now Engie), September 2016The 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, 2016EU State Aid, Financing Transactions, Tax Avoidance Schemes, , , , 2016-09-30 13:39:55
Czech Republic vs. Toll Manufacturer, Sep. 2016, Supreme Administrative Court, No. 5 Afs 194/2015 – 34A 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, 2016Transfer Pricing Methods, , , , 2016-09-27 16:53:48
Germany vs. Corp. September 2016, Supreme Tax Court IV R 1 14Tax 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, 2016Burden of Proof, , , 2016-09-22 13:27:50
US vs. Exelon Corp, September 2016, US Tax CourtThe 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, 2016Delineation - Substance over Form, , 2016-09-19 12:24:31
Australia vs. Tech Mahindra Limited, September 2016, Federal Court, Case no. 2016 ATC 20-582This  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, 2016Arm's Length Principle, Permanent Establishments, , 2016-09-06 08:04:31
European Commission vs. Ireland and Apple, August 2016, State Aid DecisionAccording 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, 2016EU State Aid, Tax Avoidance Schemes, , , , 2016-08-10 15:27:39
Poland vs. Corp. Aug. 2016, Supreme Administrative Court, Case No. II FSK 1097/16A 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, 2016Financing Transactions, , 2016-08-04 08:12:32
US vs. Boston Scientific Corporation, July 2016Boston 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, 2016Arm's Length Principle, , 2016-07-19 19:59:41
Italy vs Tanti Investimentos S.A, Supreme Court, June 2016, No. 13387In 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, 2016Burden of Proof, Financing Transactions, Legality - Legitimacy - Constitutional, 2016-06-30 19:06:08
Spain vs. Dell, June 2016, Supreme Court, Case No. 1475/2016Dell 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, 2016Business Restructuring, Permanent Establishments, Sales and Marketing Hubs, Tax Avoidance Schemes, , , , , 2016-06-20 09:45:34
US vs. Medtronic Inc. June 2016, US Tax CourtThe 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, 2016Intangibles - Goodwill Know-how Patents, Royalty and License Payments, Transfer Pricing Methods, , , , , , 2016-06-09 19:56:03
Sweden vs. Nobel Biocare Holding AB, HFD 2016 ref. 45In 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, 2016Arm's Length Principle, Financing Transactions, , , , 2016-06-07 07:54:20
Spain vs. PEUGEOT CITROEN AUTOMOVILES, May 2016, Supreme Court, case nr. 58/2015In 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, 2016Financing Transactions, General Anti-Avoidance Rules (GAAR), Non-Recognition and Recharacterisation, Shares and Dividends, Tax Avoidance Schemes, , , 2016-05-31 12:16:12
India vs. Gap International Sourcing Pvt. Ltd., May 2016, ITA No.1077/Del./2016Gap 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, 2016Services and Fees, Transfer Pricing Methods, , , , , , 2016-05-17 22:09:10
India vs. L’oreal India Pvt. Ltd. May 2016, Income Tax Appellate TribunalL’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, 2016Transfer Pricing Methods, , , , , , 2016-05-04 19:44:14
Italy vs Edison s.p.a. April 2016, Supreme Court no 7493In 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, 2016Burden of Proof, Financing Transactions, Shares and Dividends, , , , 2016-04-15 19:33:12
France vs Société Lifestand vivre debout, 15 April 2016, CEIn 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, 2016Arm's Length Principle, , , , 2016-04-15 13:14:45
Sweden vs. taxpayer april 2016, Swedish Supreme Administrative Court, HFD 2016 ref. 23In 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, 2016Arm's Length Principle, Legality - Legitimacy - Constitutional, , , 2016-04-12 10:30:43
Italy vs PDM D srl, 2016, Supreme Court case no. 6331-2016This 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, 2016Financing Transactions, Tax Avoidance Schemes, 2016-04-01 20:04:41
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, 2016Arm's Length Principle, Transfer Pricing Methods, , 2016-03-16 13:22:36
US vs. Guidant Corporation. February 2016The 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, 2016Arm's Length Principle, Intangibles - Goodwill Know-how Patents, Royalty and License Payments, Transfer Pricing Methods, , , , 2016-02-29 19:58:17
US vs Altera. February 2016, AppealOn 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, 2016Cost Contribution Arrangements, 2016-02-23 20:01:56
Canada vs. Marzen Artistic Aluminum. January 2016The 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, 2016Sales and Marketing Hubs, Transfer Pricing Methods, , , , , , 2016-01-29 17:39:57
Germany vs. Corp. January 2016, Supreme Tax Court I R 22 14The 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, 2016Intangibles - Goodwill Know-how Patents, Royalty and License Payments, , , 2016-01-21 13:32:08
Switzerland vs Corp, 16. Dezember 2015, Case No. SB-2015-00005A 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, 2015Financing Transactions, , 2015-12-16 23:26:52
US v Coca-Cola, December 2015. US Tax CourtUS v Coca-Cola, December 2015. US Tax CourtThe 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, 2015Arm's Length Principle, Transfer Pricing Methods, , , 2015-12-14 20:04:22
France vs. Sté Property Investment Holding, 9 December 2015, CE No 367897In 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, 2015Services and Fees, 2015-12-09 13:58:02
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, 2015Financing Transactions, Non-Recognition and Recharacterisation, Tax Avoidance Schemes, , , , 2015-12-03 14:00:34
Germany vs. Corp. November 2015, Supreme Tax Court judgment I R 57/13The 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, 2015Financing Transactions, General Anti-Avoidance Rules (GAAR), , , , 2015-11-11 13:35:55
Australia vs. Chevron Australia Holdings Pty Ltd . October 2015, Federal Court of Australia, case No. 3 and 4The 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, 2015Burden of Proof, Financing Transactions, General Anti-Avoidance Rules (GAAR), Tax Avoidance Schemes, Transfer Pricing Methods, , , , , 2015-10-23 12:33:08
European Commission vs Luxembourg and Fiat, October 2015, State Aid DecisionThe European Commission have decided that selective tax advantages for Fiat in Luxembourg are illegal under EU state aid rules.  October 21, 2015EU State Aid, Tax Avoidance Schemes, , , 2015-10-21 15:27:16
Germany vs. Corp, October 2014, Supreme Tax Court judgment I R 31/13The 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, 2015Financing Transactions, General Anti-Avoidance Rules (GAAR), Non-Recognition and Recharacterisation, Shares and Dividends, , , , 2015-10-21 13:45:11
Germany vs. Corp. October 2015, Supreme Tax Court decision I R 20/15The 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, 2015Financing Transactions, General Anti-Avoidance Rules (GAAR), Legality - Legitimacy - Constitutional, , , 2015-10-14 13:38:38
Denmark vs Corp. October 2015, Supreme Court, case nr. SKM2015.659.HRA 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, 2015Business Restructuring, , , 2015-10-08 12:04:38
Italy vs. ILPEA SPA, July 2015, Supreme Court 15298This 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, 2015Transfer Pricing Methods, , 2015-07-25 19:37:09
Italy vs SAME DEUTZ FAHR ITALIA s.p.a, July 2015, Supreme Court, no 15282This case is about methods applicable for determination of “normal value” in transactions between related companies; the Comparable Uncontrolled Price method (CUP). Click here for translationJuly 21, 2015Arm's Length Principle, Burden of Proof, Transfer Pricing Methods, 2015-07-21 19:40:28
Spain vs. INC Bank, July 2015, Spanish National High CourtIn 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, 2015Financing Transactions, Non-Recognition and Recharacterisation, Permanent Establishments, , 2015-07-10 17:29:39
Germany vs. Corp. June 2015, Supreme Tax Court judgment I R 29/14The 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, 2015Financing Transactions, , , , , , , 2015-06-24 13:43:05
South Africa vs. AB LLC and BD Holdings LLC, May 2015, Tax Court, Case No: 13276US 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, 2015Permanent Establishments, , , , 2015-05-15 18:48:18
Norway vs. GE Healthcare AS, May 2015, Supreme Court , HRD-2015-01008-AThe 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, 2015Financing Transactions, Tax Avoidance Schemes, Tax Treaties, , 2015-05-08 21:15:25
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, 2015Financing Transactions, Tax Treaties, , , , 2015-05-05 21:59:36
Norway vs. Total E&P Norge AS, October 2015, Supreme Court 2014/498, ref no. HR-2015-00699-ATotal 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, 2015Burden of Proof, Commodity Transactions, Legality - Legitimacy - Constitutional, Transfer Pricing Documentation, Transfer Pricing Methods, , , , 2015-03-27 21:00:10
US vs. BMC Software. March 2015The 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, 2015Arm's Length Principle, , 2015-03-03 19:06:58
Canada vs. Skechers USA Canada Inc. March 2015, Federal Court of AppealIn 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, 2015Cost Contribution Arrangements, Intangibles - Goodwill Know-how Patents, Royalty and License Payments, , , , , , 2015-03-02 17:32:45
France vs. Rottapharm, Jan 2015, CE No 369214In 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, 2015General Anti-Avoidance Doctrines, , 2015-01-23 14:25:23
Switzerland vs. Corp, Jan. 2015, Case No. 2C_1082-2013, 2C_1083-2013In 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, 2015Arm's Length Principle, Burden of Proof, Legality - Legitimacy - Constitutional, , , 2015-01-15 23:04:12
Italy vs GE TRANSPORTATION SYSTEMS SPA, December 2014, Supreme Court 27296In 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, 2014Transfer Pricing Documentation, , , 2014-12-23 19:25:44
India vs. Quark Systems Pvt. Ltd. Oct 2014, ITA No.282Quark 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, 2014Transfer Pricing Methods, , , , 2014-10-31 20:56:36
Switzerland vs Corp, Oct. 2014, Federal Supreme Court, Case No. 4A_138-2014Decision 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, 2014Financing Transactions, , 2014-10-16 23:16:24
Switzerland vs Swisscargo AG, Oct 2014, Federal Supreme Court, Case No 4A_138/2014Zero 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 translationOctober 16, 2014Financing Transactions, , 2014-10-16 22:55:45
Russia vs British American Tobacco, Aug. 2014, Russian High CourtA 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 administrationAugust 5, 2014Financing Transactions, General Anti-Avoidance Rules (GAAR), , , 2014-08-05 21:28:03
Italy vs Alfa Gomma SUD s.r.l. July 2014, Supreme Court 16480This 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 translationJuly 18, 2014Cost Contribution Arrangements, Services and Fees, , 2014-07-18 19:29:51
Finland vs. Corp, July 2014, Supreme Administrative Court HFD 2014:119A 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, 2014Delineation - Substance over Form, Financing Transactions, Legality - Legitimacy - Constitutional, Non-Recognition and Recharacterisation, Tax Avoidance Schemes, Tax Treaties, , , , , , 2014-07-04 16:13:56
South Africa vs MTN International Ltd (Mauritius), Marts 2014, Supreme Court of Appeal, Case No. 275/2013 [2014] ZASCA 8The 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, 2014Financing Transactions, Legality - Legitimacy - Constitutional, , , , 2014-03-14 16:22:06
France vs. Nestlé water, Feb. 2014, CAA no 11VE03460In 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, 2014Burden of Proof, Sales and Marketing Hubs, , , , , , , 2014-02-18 21:40:44
Finland vs. Corp. February 2014, Supreme Administrative Court HFD 2014:33A 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, 2014Shares and Dividends, Tax Avoidance Schemes, Transfer Pricing Methods, , , 2014-02-04 16:11:38
Nederlands vs. Corp, January 2014, Lower Court, Case nr. AWB11/3717, 11/3718, 11/3719, 11/3720, 11/3721The 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, 2014Commercially Irrational Transactions, Financing Transactions, Non-Recognition and Recharacterisation, , , 2014-01-17 08:35:30
Switzerland vs Hotel X. SA, Nov. 2013, Courts of Switzerland, Case No. 2C_291 / 2013 / 2C_292 / 2013A 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 translationNovember 26, 2013Financing Transactions, , , 2013-11-26 20:48:37
Italy vs. Solvay s.a., October 2013, Supreme Court, 24005This 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 translationOctober 23, 2013Transfer Pricing Methods, , 2013-10-23 19:21:57
Switzerland vs. X, Oct. 2013, Federal Supreme Court, Case No. 2C_644-2013X 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, 2013Arm's Length Principle, Burden of Proof, , 2013-10-21 22:53:51
Germany vs. US taxpayer. October 2013, Supreme Tax Court judgment IX R 25/12The 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, 2013MAP - APA, Shares and Dividends, Tax Treaties, , , 2013-10-09 13:54:02
Denmark vs. Bombardier, October 2013, Administrative Tax Court, SKM2014.53.LSRThe 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, 2013Burden of Proof, Financing Transactions, Transfer Pricing Documentation, , , , 2013-10-07 15:29:40
Italy vs SGL CARBON SPA, September 2013, Supreme Court 22010This 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, 2013Financing Transactions, Transfer Pricing Methods, 2013-09-25 19:16:53
France vs SARL Garnier Choiseul Holding, 17 July 2013, CE No 352989This 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 translationJuly 17, 2013Delineation - Substance over Form, General Anti-Avoidance Rules (GAAR), , , 2013-07-17 14:11:01
Switzerland vs. Y Holding AG, May 2013, Federal Supreme Court, Case No. 2C_1086/2012A 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, 2013Financing Transactions, Tax Avoidance Schemes, , 2013-05-16 23:10:56
Germany vs. Corp. April 2013, Supreme Tax Court judgment I R 45/11The 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, 2013Financing Transactions, Transfer Pricing Documentation, , , 2013-04-10 13:55:37
Czech Republic vs. Goldfein, March 2013, Supreme Administrative Court, No. 1 Afs 99/2012-52The 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, 2013Burden of Proof, 2013-03-13 18:18:37
New Zealand vs Alesco New Zealand Ltd March 2013 Court of Appeal NZCA 40In 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, 2013Financing Transactions, General Anti-Avoidance Rules (GAAR), Non-Recognition and Recharacterisation, Shares and Dividends, Tax Avoidance Schemes, , , 2013-03-08 07:57:55
Finland vs. Corp. March 2013, Supreme Administrative Court HFD 2013:36A 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, 2013Transfer Pricing Methods, , , , 2013-03-03 15:12:28
Netherlands vs. Corp, March 2013, Supreme Court, Case no. 11/01985X 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, 2013Financing Transactions, , 2013-03-01 13:42:45
Italy vs Computer Associates SPA, February 2013, Supreme Court no 4927This 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 translationFebruary 27, 2013Royalty and License Payments, 2013-02-27 19:10:09
France vs. Sociétè Nestlé Finance , Feb 2013, CAA no 11PA02914 and 12PA00469In 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, 2013Business Restructuring, , , , , 2013-02-05 23:27:55
Germany vs. Corp. December 2012, Federal Tax Court 11.10.2012, I R 75/11A 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, 2012Arm's Length Principle, Services and Fees, Tax Treaties, , 2012-12-10 13:08:09
France vs. France Immobilier Group, Nov. 2012, CE no 328670In 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 translationNovember 7, 2012Financing Transactions, 2012-11-07 09:11:31
Canada vs. GlaxoSmithKline. October 2012, Supreme CourtThe 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, 2012Commodity Transactions, Transfer Pricing Methods, , , , , 2012-10-18 17:51:11
Canada vs. McKesson. October 2012. Tax CourtMcKesson 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, 2012Financing Transactions, General Anti-Avoidance Rules (GAAR), Tax Avoidance Schemes, , , , , , , 2012-10-12 17:46:09
Switzerland vs. Finanz AG, Oct. 2012, Federal Supreme Court, Case No 2C_708/2011A 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, 2012Financing Transactions, Permanent Establishments, , , , , 2012-10-05 21:36:40
Spain vs. Bicc Cables, July 2012, Supreme Court case nr. 3779/2009In 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 translationJuly 22, 2012Arm's Length Principle, Non-Recognition and Recharacterisation, Series of Related Transactions, , 2012-07-22 12:08:28
Italy vs Take Two Interactive Italia s.r.l., July 2012, Supreme Court, no 11949/2012In 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, 2012Arm's Length Principle, Burden of Proof, , , 2012-07-13 10:34:10
Switzerland vs. Corp, Juli 2012, Federal Supreme Court, Case No. 2C_834-2011, 2C_836-2011In 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, 2012Arm's Length Principle, Burden of Proof, Commercially Irrational Transactions, , 2012-07-06 22:59:47
South Africa vs. Tradehold Ltd, May 2012, Supreme Court of Appeal, Case No. 132/11Tradehold 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, 2012Permanent Establishments, , , , , 2012-05-08 19:55:47
France vs. Microsoft, Feb 2012, CCA, No 10VE00752In 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, 2012Arm's Length Principle, Burden of Proof, Sales and Marketing Hubs, , , , , 2012-02-16 19:43:39
Denmark vs. Swiss Re. February 2012, Supreme Court, SKM2012.92This 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, 2012Financing Transactions, , , , 2012-02-02 09:08:57
India vs Vodafone International Holdings BV, 2012, Supreme CourtIn 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, 2012Tax Avoidance Schemes, , , , 2012-01-15 19:05:30
Spain vs. Roche, January 2012, Supreme Court case nr. 1626/2008This 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, 2012Business Restructuring, Permanent Establishments, Sales and Marketing Hubs, , , , , , 2012-01-12 08:50:32
France vs. Société Office Dépôt France SNC, Jan 12 CAA NoIn 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 translationJanuary 5, 2012Services and Fees, 2012-01-05 12:50:20
Norge vs. Dell Norge. December 2011, HRD saknr 2011-755The 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, 2011Permanent Establishments, Sales and Marketing Hubs, Tax Treaties, , , , 2011-12-05 20:54:29
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, 2011Commercially Irrational Transactions, Financing Transactions, Non-Recognition and Recharacterisation, , , , 2011-11-25 11:11:46
Nederlands vs. Corp, July 2011, Lower Court AWB 08/9105X 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, 2011Commercially Irrational Transactions, Financing Transactions, Non-Recognition and Recharacterisation, , , 2011-07-11 08:29:39
India vs. Fulford (India) Limited, July 2011, Income Tax Appellate TribunalFulford 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, 2011Transfer Pricing Methods, , , , , , , 2011-07-04 13:54:54
Australia vs SFN 2011The 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, 2011Burden of Proof, Commodity Transactions, Transfer Pricing Methods, , 2011-06-24 19:05:14
France vs. SOCIETE SOUTIRAN ET COMPAGNIE, March 2011, Supreme Tax Court, Case nr. 342099The 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, 2011Arm's Length Principle, Burden of Proof, Legality - Legitimacy - Constitutional, 2011-03-02 12:45:10
Czech Republic vs. Corp. February 2011, Supreme Administrative Court, Afs 19/2010-125Czech Republic vs. Corp. February 2011, Supreme Administrative Court, Afs 19/2010-125A 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, 2011Arm's Length Principle, Burden of Proof, Services and Fees, , , 2011-02-27 12:28:19
Spain vs. Borex, February 2011, National Court case nr. 80-2008A 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, 2011Business Restructuring, Permanent Establishments, , 2011-02-09 11:30:35
Czech Republic vs. Corp. January 2011, Supreme Court 7 Afs74-2010-81Czech Republic vs. Corp. January 2011, Supreme Court 7 Afs74-2010-81A 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, 2011Burden of Proof, , 2011-01-27 12:34:31
France vs. Banca di Roma, Dec. 2010. CAA no 08PA05096In 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, 2010Financing Transactions, General Anti-Avoidance Rules (GAAR), 2010-12-16 12:44:25
South Africa vs. NWK LtD, Dec. 2010, Supreme Court of Appeal, Case No. 27/10Over 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, 2010Series of Related Transactions, Tax Avoidance Schemes, , , 2010-12-01 20:33:00
Finland vs. Corp. November 2010, Supreme Administrative Court HFD 2010:73A 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, 2010Financing Transactions, , , 2010-11-04 16:43:31
Canada vs. General Electric Capital. November 2010In 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, 2010Financing Transactions, , , , , , , 2010-11-01 17:47:32
France vs. Novartis Groupe France SA, June 2008 and October 2010, CAA no No 06PA02841 and No 09LY02084In 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, 2010Burden of Proof, 2010-10-29 16:38:48
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, 2010Intangibles - Goodwill Know-how Patents, Royalty and License Payments, , , , , 2010-07-01 19:27:42
Sweden vs. Diligentia, June 2010, Regeringsratten case nr 2483-2485-09Diligentia 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, 2010Financing Transactions, , 2010-06-22 14:12:24
Norway vs. Telecomputing, June 2010, Supreme Court case nr. HR-2010-1072-AThis 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, 2010Commercially Irrational Transactions, Delineation - Substance over Form, Financing Transactions, , 2010-06-21 06:34:15
France vs. Zimmer Ltd., March 2010, Conseil D’Etat No. 304715, 308525The 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, 2010Business Restructuring, Permanent Establishments, Sales and Marketing Hubs, , , 2010-03-25 12:23:30
France vs. SOCIETE D’ACQUISITIONS IMMOBILIERES, Jan 2010, CE, No. 313868In 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, 2010Financing Transactions, General Anti-Avoidance Doctrines, Non-Recognition and Recharacterisation, , 2010-01-22 08:48:15
US vs. Veritas Software Corporation, December 2009The 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, 2009Cost Contribution Arrangements, Intangibles - Goodwill Know-how Patents, Tax Avoidance Schemes, Valuation - DCF and CUT/CUPs, , , , , , , , 2009-12-10 20:24:47
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, 2009Arm's Length Principle, Financing Transactions, Transfer Pricing Methods, , , , , , , 2009-03-31 13:58:21
India vs. Gemplus India Pvt. Ltd. March 2009, ITA case no. 352Gemplus 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, 2009Royalty and License Payments, Services and Fees, , 2009-03-30 10:52:36
Australia vs. Roche July 2008, Administrative Appeals Tribunal NT 2005/7 & 56-65The 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, 2008Transfer Pricing Methods, , , , , 2008-07-24 19:27:47
Norway vs. Cytec. September 2007, LRD 2007/1440This 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, 2007Business Restructuring, Intangibles - Goodwill Know-how Patents, , , , , 2007-09-26 07:14:56
Norway vs. Statoil Angola, 2007, Supreme Court, No. RT 2007-1025Two 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, 2007Arm's Length Principle, Financing Transactions, , , , , , 2007-06-26 11:46:20
Netherlands vs Corp, May 2007, District Court, Case nr. 05/1352IP 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, 2007Business Restructuring, Commercially Irrational Transactions, Delineation - Substance over Form, Intangibles - Goodwill Know-how Patents, Non-Recognition and Recharacterisation, Royalty and License Payments, , , , , , 2007-05-04 12:57:55
South Africa vs. BP Southern Africa (Pty) Ltd, March 2007, Supreme Court of Appeal, Case No 60 / 06, 2007-07the 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, 2007Royalty and License Payments, , , 2007-03-13 17:56:16
Netherland vs. X BV, March 2007, District Court of Arnhem, Case No ECLI:NL:RBARN:2007:BA0339X 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, 2007Transfer Pricing Methods, , , 2007-03-09 20:53:13
Canada vs. Avotus Corporation. November 2006The 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, 2006Delineation - Substance over Form, , 2006-11-21 17:52:56
France vs. SA Cap Gemini, Nov. 2005, CE, No 266436In 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, 2005Burden of Proof, Royalty and License Payments, , , 2005-11-07 20:56:35
US vs. Xilinex Inc, August 2005The IRS ruled 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.  August 30, 2005Cost Contribution Arrangements, 2005-08-30 12:16:22
South Africa vs. B SA Limited, Aug 2005, Tax Court, Case No. 11454B 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, 2005Royalty and License Payments, , , 2005-08-25 21:16:07
India vs Azadi Bachao Andolan, 2003, Supreme CourtIn 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, 2003Tax Avoidance Schemes, , , 2003-10-07 19:08:10
Columbia vs. Corp, Aug. 2003, The Constitutional Court, Case No. C-690-03The 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, 2003Arm's Length Principle2003-08-12 14:30:41
US vs. Boing Co. March 2003, Supreme Court of AppealsBoeing 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, 2003Arm's Length Principle, Transfer Pricing Methods, 2003-03-04 09:41:05
US vs Seagate Technology, December 2000, United States Tax CourtThe 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, 2002Arm's Length Principle, Cost Contribution Arrangements, 2002-12-22 12:09:44
France Lindt & Sprungli, December 2002, CE No 97BX01746In 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 translationDecember 4, 2002Arm's Length Principle, 2002-12-04 16:27:41
US vs. DHL. April 2002, U.S. Court of AppealsWhen 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, 2002Financing Transactions, Intangibles - Goodwill Know-how Patents, Valuation - DCF and CUT/CUPs, , , 2002-04-11 10:30:50
France vs. SA Rocadis, September 2001, CEIn 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 translationSeptember 26, 2001Arm's Length Principle, Burden of Proof, 2001-09-26 20:07:39
US vs. GlaxoSmithKlein, July 2001, United State Tax CourtThis 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, 2001Burden of Proof, Legality - Legitimacy - Constitutional2001-07-05 11:56:28
US vs. Bankers Trust. September 2000This decision did not deal directly with transfer pricing, but it describes the limits on IRS authority to regulate beyond statuatory powers.September 20, 2000Legality - Legitimacy - Constitutional, 2000-09-20 09:20:11
US vs. BMC. January 1999The 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, 1999Burden of Proof, Legality - Legitimacy - Constitutional, Transfer Pricing Documentation, 1999-01-08 09:43:55
US vs Union Carbide, June 1998Union 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, 1998Arm's Length Principle1998-06-15 12:14:09
France vs. Soladi, April 1998, CAA No. 94NC00880In 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 translationApril 30, 1998Financing Transactions, General Anti-Avoidance Doctrines, 1998-04-30 10:07:08
France vs. SA Bossard Consultants, March 1998, Adm. Court, no 96pa00673N° 96PA00673A 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 translationMarch 17, 1998Royalty and License Payments, , , 1998-03-17 15:09:37
US vs. Microsoft Corp. February 1998Microsoft 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, 1998Transfer Pricing Methods1998-02-10 12:06:03
France vs SA Borsumij Whery France, Feb 1997, Adm Court of appeal, No 94PA00511The 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 translationFebruary 11, 1997Services and Fees, Transfer Pricing Documentation, , 1997-02-11 14:55:53
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, 1996Commercially Irrational Transactions, Intangibles - Goodwill Know-how Patents, Non-Recognition and Recharacterisation, 1996-10-09 12:00:32
France vs. Montlaur Sakakini, Oct 1995, CAA, No 95LY00427In 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 translationOctober 22, 1995Financing Transactions, General Anti-Avoidance Doctrines, , 1995-10-22 09:01:16
US vs International Paper. April 1995In 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, 1995Transfer Pricing Methods1995-04-27 11:58:33
France vs. PHARMATIQUE INDUSTRIE, July 1994, CAA, No 92PA01392The 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 translationJuly 12, 1994Transfer Pricing Methods, , 1994-07-12 15:47:35
US vs. National Semiconductor, May 1994, United States Tax CourtNational 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, 1994Arm's Length Principle1994-05-02 12:07:57
France vs Baker International, April 1994, CAA, no 92BX01109In 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 translationApril 6, 1994Financing Transactions, General Anti-Avoidance Doctrines, , 1994-04-06 10:02:42
France vs Vansthal International, March 1993, CAA, No 92NC00227In 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 translationMarch 11, 1993Sales and Marketing Hubs, Services and Fees, , 1993-03-11 20:20:58
US vs. Dow, January 1993, US Court of AppealsDow 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, 1993Arm's Length Principle1993-01-14 11:29:11
France vs Ford, March 1992, Conseil d’Etat statuant au contentieux, No 87947The 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 translationMarch 4, 1992Arm's Length Principle1992-03-04 15:36:09
France vs. Carrefour, Feb. 1992, CE no 81690/82782In 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 translationFebruary 17, 1992Financing Transactions, , 1992-02-17 10:14:40
US vs. Computervision. April 1991Computervision 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, 1991Arm's Length Principle1991-04-16 10:24:40
US vs. Sundstrand Corp, Feb. 1991, United States Tax CourtSunstrand 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, 1991Legality - Legitimacy - Constitutional, Royalty and License Payments, , , , 1991-02-19 12:11:22
France vs. Reynolds Tobacco, Nov 1990, CAAIn 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 translationNovember 20, 1990Arm's Length Principle, Sales and Marketing Hubs, Services and Fees, 1990-11-20 16:00:58
France vs. Caterpillar, October 1989, CE No 65009In 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 translationOctober 25, 1989Royalty and License Payments, , 1989-10-25 20:45:22
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, 1970Royalty and License Payments, Valuation - DCF and CUT/CUPs, , , 1970-05-15 07:49:04