The case of Volkswagen Argentina S.A. revolves around benchmarking and comparability adjustments.
For purpose of its transfer pricing analysis Volkswagen Argentina had included an extraordinary result resulting from forgiveness of a loan granted by Volkswagen Argentina Holding S.A. in its profits and on that bases concluded that the results had been at arm’s length – or even above.
The tax authorities disagreed with the adjustment made by VWA to its profits and found that it had not been remunerated at arm’s length.
A complaint was filed with the tax court, which decided in favour of VWA.
An appeal was then filed by the tax authorities with the Court of Appeal.
Judgment
The Federal Court of Appeals supported VWA making the adjustment to VWA’s profits and also the approach of averaging out the results over a period of three year. The appeal of the tax authorities was therefore dismissed.
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