A Korean subsidiary of a Dutch electronics multinational was assessed for excess transfer prices paid to foreign related parties across medical equipment, household appliances, and lighting segments. Tax authorities aggregated maintenance services with product sales and selected comparables based on domestic service businesses. The Korean Supreme Court remanded the case for reexamination in 2025, finding the comparable selection methodology required further review ... Read more

A Korean polypropylene manufacturer sold products to foreign group companies through an export marketing arrangement. The tax authority assessed additional taxable income, treating underpriced sales as hidden profit distributions. Courts found that failure to account for sales volume differences invalidated assessments for certain group companies, while assessments for others were upheld as lawful. The Supreme Court affirmed in 2025, confirming that a single comparable can suffice when comparability criteria are properly applied ... Read more

A Korean acrylic-resin manufacturer was assessed for FY 2020–2022 across multiple related-party transactions, including sales to a sister company, seconded employee costs, underpriced guarantee fees, and excessive technical support fees. The company argued all transactions were arm's length and supported by comparability analyses. The Review Board decided mostly in favour of the tax authority in April 2025, upholding the bulk of the adjustments ... Read more

A Korean acrylic-resin manufacturer was assessed for FY 2020–2022 across multiple related-party transactions, including sales to a sister company, seconded employee costs, underpriced guarantee fees, and excessive technical support fees. The company argued all transactions were arm's length and supported by comparability analyses. The Review Board decided mostly in favour of the tax authority in April 2025, upholding the bulk of the adjustments ... Read more

A Korean limited risk distributor importing and selling vehicles incurred substantial losses between 2017 and 2021 following a regulatory sales suspension, undertaking market penetration measures funded partly by parent reimbursements. The tax authority disputed the treatment of those compensations as non-operating income. The National Tax Tribunal upheld the authority's position in 2025, ruling that a limited risk distributor cannot bear market penetration costs and that parent reimbursements must be classified as operating income under the TNMM ... Read more

A Korean limited risk distributor importing and selling vehicles incurred substantial losses between 2017 and 2021 following a regulatory sales suspension, undertaking market penetration measures funded partly by parent reimbursements. The tax authority disputed the treatment of those compensations as non-operating income. The National Tax Tribunal upheld the authority's position in 2025, ruling that a limited risk distributor cannot bear market penetration costs and that parent reimbursements must be classified as operating income under the TNMM ... Read more

A Korean polypropylene manufacturer disputed tax authority assessments alleging below-arm's-length pricing on sales to foreign group companies. The Seoul High Court in 2025 examined whether the CUP method was correctly applied, focusing on sales volume as a comparability factor. Earlier rulings had invalidated some assessments for failing to account for volume differences, while upholding others where a single comparable transaction was deemed sufficient ... Read more

A Korean ceramics distributor was assessed for allegedly transferring goodwill to two related companies without consideration, based on profit margins six times the industry average. The company argued its earnings reflected shareholder capability and related-party support, not transferable goodwill. The Tax Tribunal agreed and set aside the assessment in February 2025, concluding no valuable goodwill existed to be transferred ... Read more

A Korean ceramics distributor was assessed for allegedly transferring goodwill to two related companies without consideration, based on profit margins six times the industry average. The company argued its earnings reflected shareholder capability and related-party support, not transferable goodwill. The Tax Tribunal agreed and set aside the assessment in February 2025, concluding no valuable goodwill existed to be transferred ... Read more

A Korean company was assessed for failing to charge affiliates fees for use of its trademarks. The Seoul High Court found that several marks were owned by the affiliates themselves, not the parent, and that the tax authority's method for calculating additional taxable income was flawed. Despite upholding the principle that group trademark royalties should be charged, the court annulled the entire assessment in favour of the taxpayer in 2024 ... Read more

A Korean subsidiary importing medical equipment, appliances and lighting products from related parties was audited after tax authorities rejected its business-line segmentation and functional analysis. Authorities reclassified activities and selected new comparables, issuing additional assessments. The Korean High Court ruled in favour of the taxpayer in August 2024, finding the authority's segmentation and comparable selection flawed ... Read more

A Korean polypropylene manufacturer sold products to foreign group companies through an export marketing arrangement. The tax authority assessed additional taxable income, treating the shortfall as dividends. The Seoul Administrative Court in 2024 partially upheld the assessments, invalidating those where sales volume differences were ignored in comparability analysis, while confirming that a single comparable transaction was sufficient to establish arm's length pricing for other related-party transactions ... Read more

A Korean company owned a registered trademark used by group affiliates without receiving any royalties. The tax authority added arm's length royalties to the company's taxable income. The company argued the trademark was collectively developed and no payments were due. The Tax Tribunal upheld the assessment in 2024, finding it lacked economic rationality for a trademark owner to allow royalty-free use by related parties ... Read more

A Korean hygiene product manufacturer sold goods to forty-five related parties at cost plus 8%, dispatched employees abroad, and transferred know-how royalty-free. The tax authority assessed additional profits for non-arm's length pricing and unpaid royalties and service fees. The Korea Tax Tribunal ruled mostly in favour of the tax authority in May 2024, rejecting the taxpayer's reliance on internal comparables and idle-capacity rationale under the cost-plus method ... Read more

A Korean chemical fiber manufacturer failed to charge royalties to domestic and overseas related parties for trademark use, and to its Chinese subsidiary for technology and know-how, across fiscal years 2008 to 2012. The tax authority assessed arm's length royalties and added them to taxable income. The High Court upheld the assessment in 2024, finding affiliates had benefited from the trademarks and the taxpayer provided insufficient justification for not collecting royalties ... Read more

A Korean subsidiary of a French luxury goods group applied the resale price method to verify transfer prices on imports from a Singaporean affiliate for FY 2014–2018. The tax authority rejected the taxpayer's brand value adjustment and revised its comparability analysis. The Korea Tax Tribunal upheld the RPM approach and ruled mostly in favour of the tax authority, finding the revised cost-base adjustments for sales-related expenses largely compliant with its prior instructions ... Read more

A Korean subsidiary of a French luxury goods group imported products from a Hong Kong affiliate and applied the resale price method for transfer pricing purposes. The tax authority rejected the original application and issued a reassessment. Korea's Tax Tribunal upheld the RPM but ordered revised comparability adjustments. On re-investigation, the authority recalculated the arm's length range, issuing a partial refund, while the taxpayer's second appeal was dismissed in favour of the tax authority ... Read more

A Korean subsidiary of a French luxury goods group imported products from a Hong Kong affiliate and applied the resale price method for transfer pricing purposes. The tax authority rejected the original application and issued a reassessment. Korea's Tax Tribunal upheld the RPM but ordered revised comparability adjustments. On re-investigation, the authority recalculated the arm's length range, issuing a partial refund, while the taxpayer's second appeal was dismissed in favour of the tax authority ... Read more

A Korean IP-holding company allowed its subsidiaries to use trademarks, patents, and technical know-how in their distribution and manufacturing activities without charging royalties. The tax authorities assessed an arm's length royalty and added it to the parent's taxable income. The Seoul Appeals Commission dismissed the appeal in September 2023, upholding the adjustment on the basis that royalty-free use of valuable intangibles lacked economic rationality ... Read more

A Korean fuel injector manufacturer acquired a marine engine patent from its shareholder at an unsubstantiated value. The tax authority disallowed the resulting depreciation deductions and reclassified payments as non-deductible profit distributions. The District Court upheld the assessment in August 2023, finding the taxpayer failed to substantiate the arm's length value of the intangible and that the transaction reduced the tax burden through wrongful acts ... Read more

A Korean clothing company failed to collect overdue trade receivables from two overseas subsidiaries and repaid a bank loan it had guaranteed on behalf of one of them. The tax authority assessed arm's length interest on the outstanding receivables and disallowed the loan repayment as a non-deductible expense. The Korean Tax Tribunal dismissed the company's complaint and upheld both assessments in full in March 2023 ... Read more

A Korean company paid trademark royalties on its own consolidated sales but collected no royalties from its overseas sales subsidiaries for their use of the trademark. The tax authority added royalty income to the company's taxable income. The Seoul Appeals Commission upheld the assessment in 2022, rejecting arguments that the subsidiaries' limited-risk distributor status and capped profit margins meant the economic benefits of the trademark accrued solely to the parent ... Read more

A Korean IP developer entered into technology transfer agreements with a related party, receiving fees of 5% of annual sales. The tax authority recharacterised the purported patent transfers as licence agreements, treating the fees as royalties subject to higher income tax and VAT. The Tax Court agreed, finding the taxpayer was engaged in continuous and repeated licensing activity, and upheld the tax authority's assessment in full ... Read more

A Korean subsidiary distributing semiconductors for automotive and industrial clients was assessed by tax authorities after an audit found intercompany purchase prices exceeded arm's length levels for FY 2015–2018. Both parties applied TNMM but disputed comparable selection. The Korea Tax Court remanded the case in June 2022, ordering exclusion of comparables with significantly different sales volumes and requiring consideration of customer size, transaction stage, and business environment ... Read more

Samsung paid 4.35 trillion won in royalties to Microsoft for Android-related patents between 2012 and 2015, withholding 15% tax. Microsoft sought a 634 billion won refund, arguing royalties on patents unregistered in Korea were not domestic-source income. Lower courts sided with Microsoft, but Korea's Supreme Court in 2022 remanded the case for reexamination, questioning the classification of certain technology payments ... Read more

K-GAS Corp issued loans and performance guarantees to overseas subsidiaries without receiving any remuneration. The Korean tax authority assessed additional taxable income by applying the arm's length principle, using a cost-plus method to determine normal pricing. The Daegu District Court dismissed K-GAS Corp's appeal in November 2021, upholding the assessment in full and confirming the tax authority's calculation methodology ... Read more

A Korean semiconductor subsidiary disputed the transfer pricing method applied to its distribution and sales activities for FY 2013. The tax authority rejected the taxpayer's use of the berry ratio gross profit margin approach, arguing comparability issues arose from mixed functions. Seoul High Court dismissed the company's claims in May 2021, upholding the tax authority's position that TNMM was the most appropriate method ... Read more

A Korean tax authority denied reduced withholding tax rates on dividends and interest paid to Luxembourg SICAV and SICAF investment vehicles, challenging their status as treaty residents and beneficial owners under the Korea–Luxembourg Double Tax Treaty. The Korean Supreme Court ruled in favour of the taxpayers in 2020, confirming that Luxembourg SICAV and SICAF qualify as residents liable to tax and as beneficial owners entitled to reduced treaty withholding tax rates ... Read more

A Korean company paid dividends to a Hungarian entity at a 5% withholding rate under the Korea-Hungary tax treaty. The tax authority reclassified the US ultimate parent as the beneficial owner, applying a higher 15% rate. The Korean Supreme Court ruled in favour of the taxpayer in 2018, addressing the standards for beneficial ownership and treaty abuse under Korean tax law ... Read more

A Korean entertainment company paid royalties to a Hungarian Viacom affiliate under the Korea-Hungary tax treaty, applying a zero withholding rate. Korean tax authorities argued the Hungarian entity was a conduit and that the Dutch parent was the true beneficial owner, seeking to apply the Korea-Netherlands treaty instead. The Korean Supreme Court ruled in favour of the taxpayer in November 2018, rejecting the substance-over-form recharacterisation ... Read more

A Korean financial business permanent establishment borrowed from a foreign controlling shareholder exceeding six times the equity threshold, triggering thin capitalisation rules that recharacterised the excess interest as a deemed dividend. The Korean tax authority applied withholding tax accordingly. The Supreme Court examined whether the Korea-Singapore tax treaty's dividend or interest article governed the recharacterised income and remanded the case for reexamination in 2018 ... Read more

A Korean semiconductor company faced a transfer pricing dispute over intra-group service fees charged to related parties. The tax authority challenged the arm's length nature of the fees, and the Korean court ruled mostly in favour of the tax authority in August 2017, upholding the majority of the assessment raised against the taxpayer ... Read more

A Korean TV monitor manufacturer provided loans to its Brazilian subsidiary at an interest rate of LIBOR+2%, funded by shareholder loans at the same rate. Following a 2015 audit, the tax authority assessed additional corporate income tax, arguing the rate was not arm's length. The Korean Tax Tribunal dismissed the taxpayer's appeal, finding the declared interest rate was not objectively proven to reflect arm's length conditions relative to Brazilian market rates ... Read more

A Korean parent company challenged the tax authority's credit assessment model used to determine arm's length guarantee fees charged to foreign subsidiaries. The Seoul Administrative Court ruled in favour of the taxpayer in 2015, finding the model inappropriate due to flawed data sourcing, reliance on domestic corporate bankruptcy rates, and failure to account for industry-specific factors, implied warranties, and local market conditions ... Read more

A South Korean corporation disputed the tax authority's determination of arm's length interest rates on intra-group financial transactions. The tax authority challenged the rates applied, relying on LIBOR-based benchmarks. The Seoul High Court ruled mostly in favour of the tax authority in December 2010, upholding the adjustments to the intercompany interest rates under Korean transfer pricing rules ... Read more

A Korean wholesaler of pharmaceutical equipment imported from foreign related parties challenged the tax authority's selective use of the TNMM benchmark. Authorities adjusted only years where profits fell below the interquartile range, ignoring above-range years. The Korean court ruled in 2009 that transfer pricing law requires both upward and downward adjustments, finding the one-sided approach unlawful and deciding mostly in favour of the taxpayer ... Read more

A Korean pharma corporation imported patented active pharmaceutical ingredients from related parties in the US and Ireland. Tax authorities applied the CUP method using generic raw material prices as comparables, adjusting for insurance pricing ratios. The company argued generic and original drugs were not comparable due to quality and customer loyalty differences. The Korean Supreme Court ruled in favour of the taxpayer in September 2007 ... Read more

A Korean subsidiary distributing photo paper and film from related overseas parties was assessed under TNMM using six comparables the tax authority selected. The court found the authority failed to justify why traditional methods were not used and that the comparables differed significantly in size, function, and market segment. The Korean Tax Court remanded the case in 2007, ordering reexamination with a CUP-based approach ... Read more

A Korean subsidiary of Levi's claimed deductions for management support services fees paid to its foreign parent. The Korean tax authority challenged the deductibility of those payments. The Supreme Court of Korea, in its 2006 ruling, allowed the deductions, deciding mostly in favour of the taxpayer and affirming that the management support services qualified for tax deduction ... Read more

A Korean company challenged tax assessments where authorities applied the transactional net margin method using transactions with materially different terms and conditions. The Korean Supreme Court held in 2006 that TNMM may only be applied when conventional methods such as CUP cannot be used due to lack of comparables, and that significant differences between transactions must be properly adjusted. The decision was mostly in favour of the taxpayer ... Read more

A Korean pharmaceutical importer purchased medicines from foreign related parties and sold them domestically. The tax authority applied the resale price method using transactions between unrelated local companies to establish the normal price. The taxpayer challenged the comparability of the selected transactions, arguing cross-border related-party dealings were distinct. The Korean Tax Tribunal ruled in favour of the tax authority, confirming that unrelated-party domestic transactions could serve as valid comparables ... Read more

A Korean company providing sales agency, equipment installation, and maintenance services to a foreign related party was remunerated on a cost-plus 5–8% basis using six domestic comparables. The tax authority challenged the comparability analysis, and the Korea Tax Appeals Tribunal ruled mostly in favour of the authority, finding that significant functional, contractual, and risk differences between the tested company and the proposed comparables meant the comparability standard was not met ... Read more

A Korean taxpayer challenged a transfer pricing adjustment concerning prices applied in transactions with foreign related parties. The tax authority disputed whether those prices met the arm's length standard. The court found that prices applied in related-party transactions can qualify as normal prices if consistent with unrelated-party dealings, and that the arm's length range must be derived from two or more comparable uncontrolled transactions ... Read more

A Korean taxpayer disputed the tax authority's use of international transactions as comparables in a transfer pricing assessment. The Supreme Court of Korea, ruling in October 2001, confirmed that international transactions are permissible comparables for pricing domestic transactions under the CUP method, upholding the tax authority's position and clarifying the scope of comparability analysis in Korean transfer pricing law ... Read more