Author: Courts of the Czech Republic

Czech Republic vs Aisan Industry Czech, s.r.o., April 2022, Supreme Administrative Court, Case No 7 Afs 398/2019 – 49

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Aisan Industry Czech, s.r.o. is a subsidiary within the Japanese Aisan Industry Group which manufactures various engine components – fuel-pump modules, throttle bodies, carburetors for independent car manufactures such as Renault and Toyota. According to the original transfer pricing documentation the Czech company was classified as a limited risk contract manufacturer within the group, but […]

Czech Republic vs Avon Cosmetics Ltd, February 2022, Municipal Court, Case No 6 Af 36/2020 – 42

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In 2016 the British company Avon Cosmetics Limited (ACL) became the sole licensor of intellectual property rights for Europe, Africa and the Middle East within the Avon Cosmetics Group and was authorised to issue sub-licences to other group companies, including the Czech subsidiary, Avon Cosmetics spol. s r.o.. ACL charged a fee for issuing a […]

Czech Republic vs D. D. D. SERVIS OPAVA v. o. s., August 2021, Supreme Administrative Court, Case No 1 Afs 109/2021 – 67

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Following an audit the tax authorities issued an assessment of additional income resulting from an adjustment of the tax deductions related to marketing expenses. According to the tax authorities the parties to the transactions were “otherwise related” within the meaning of the Czech arm’s length provisions in § 23 par. b) point 5 of the […]

Czech Republic vs. LCN GROUP s.r.o., July 2021, Supreme Administrative Court, Case No 2 Afs 148/2020 – 37

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LCN Group had deducted costs in its taxable income for marketing services provided by related parties – PRESSTEX MEDIA SE and TARDEM Media s.r.o. and PAPILIO. The claimed advertising costs from PRESSTEX in FY 2012 was produced and implemented by PAPILIO and subsequently invoiced to LCN Group, virtually unchanged, at a price 23 times higher […]

Czech Republic vs. STARCOM INTERNATIONAL s.r.o., February 2021, Regional Court , Case No 25Af 18/2019 – 118

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A tax assessment had been issued for FY 2013 resulting in additional taxes of to CZK 227,162,210. At first the tax administration disputed that the applicant had purchased 1 TB SSDs for the purpose of earning, maintaining and securing income. It therefore concluded that the Starcom Internatioal had not proved that the conditions for tax […]

Czech Republic vs D. D. D. SERVIS OPAVA v. o. s., January 2021, Regional Court in Ostrava, Case No 22 Af 42/2019- 36

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Following an audit the tax authorities issued an assessment of additional income resulting from an adjustment of the tax deductions related to marketing expenses. According to the tax authorities the parties to the transactions were “otherwise related” within the meaning of the Czech arm’s length provisions in § 23 par. b) point 5 of the […]

Czech Republic vs. LCN Group s.r.o., April 2020, Regional Court, Case No 25 Af 76/2019 – 42

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LCN Group s.r.o. had deducted costs in its taxable income for marketing services provided by related parties. Following an audit, the tax authorities concluded that the prices agreed between the parties was not at arm’s length and issued an assessment. Decision of the Regional Court The Regional Court annulled the assessment and decided in favor […]

Czech Republic vs. ACTRAD s.r.o., February 2020, Supreme Administrative Court, No. 7 Afs 176/2019 – 26

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The issue in this case was the pricing of advertising services acquired by ACTRAD s.r.o. from related parties PRESSTEX PRINT and PRESSTEX MEDIA . According to the authorities ACTRAD instead of acquiring advertising and promotional services directly from the sports clubs (which was possible), used the services of intermediaries PRESSTEX PRINT and PRESSTEX MEDIA, who […]

Czech Republic vs. Automotoklub Masarykův, January 2020, Supreme Administrative Court, Case No. 9 Afs 232/2018 – 63

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At dispute was the definition of the conditions under which a reference price (i.e. a price that would be negotiated between independent persons in normal business relations under the same or similar conditions) cannot be determined and the tax administrator should therefore use the administrative price (i.e. the price determined in accordance with the legal […]

Czech Republic vs. Eli Lilly ČR, s.r.o., December 2019, District Court of Praque, No. 6 Afs 90/2016 – 62

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Eli Lilly ČR imports pharmaceutical products purchased from Eli Lilly Export S.A. (Swiss sales and marketing hub) into the Czech Republic and Slovakia and distributes them to local distributors. The arrangement between the local company and Eli Lilly Export S.A. is based on a Service Contract in which Eli Lilly ČR is named as the […]

Czech Republic vs Aisan Industry Czech, s.r.o., October 2019, Regional Court, Case No 15 Af 105/2015

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Aisan Industry Czech, s.r.o. is a subsidiary within the Japanese Aisan Industry Group which manufactures various engine components – fuel-pump modules, throttle bodies, carburetors for independent car manufactures such as Renault and Toyota. According to the original transfer pricing documentation the Czech company was classified as a limited risk contract manufacturer within the group, but […]

Czech Republic vs. AZETKO s.r.o., September 2019, Supreme Court, No. 5 Afs 341/2017 – 47

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The tax authorities of the Czech Republic issued an assessment of additional income taxes and penalties for FY 2010 and 2011, because AZETKO s.r.o. according to the tax authorities did not receive an arm’s length remuneration for administration and operation of a website and e-shop on behalf on a related party, Quantus Consulting s.r.o. AZETKO […]

Czech Republic vs. J.V., May 2019, Supreme Administrative Court, Case No 2 Afs 131/2018 – 59

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For FY 2007, 2008 and 2009, JV had deducted expenses consisting in the payment for services pursuant to invoices issued by BP Property s.r.o. and TOP ZONEVIEW. The services consisted in the provision and implementation of an advertising campaign. Following an audit the tax authorities adjusted JV’s taxable income by the difference found, since pursuant […]

Czech Republic vs. JUTTY GROUP s.r.o., December 2016, Supreme Administrative Court , Case No 6 Afs 147/2016 – 28

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On the basis of the detailed evidence provided by the tax administration, the defendant stated that the essence of the case is to assess whether the applicant has proved that the taxable supply declared in invoice No 2010036 took place, i.e. that Dosnetex plus s.r.o. provided the invoiced supply (production of graphic designs) to the […]

Czech Republic vs. Toll Manufacturer, Sep. 2016, Supreme Administrative Court, No. 5 Afs 194/2015 – 34

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A Czech toll manufacturer realized losses due to low capacity utilization. Transfer pricing for the manufacturing services, had been determined by applying a cost plus method based on a budget costs without a year-end true-up. In 2008, capacity utilization was low due to market conditions and the company incurred a loss. The tax authority performed […]

Czech Republic vs. JN TRANS s.r.o., November 2014, Supreme Administrative Court, Case No 9 Afs 92/2013

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In this case the court accepted the tax authorities’ procedure for determining the arm’s length price for advertising services, whereby the tax authorities took into account conditions such as the size of the advertising space, the type of event, the duration of the advertising, etc., when comparing controlled and uncontrolled transactions The appeal of JN […]

Czech Republic vs. ARROW International CR, a. s., June 2014, Supreme Administrative Court , Case No 7 Afs 94/2012 – 74

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The applicant, ARROW International CR, a.s., seeks a judgment of the Supreme Administrative Court annulling the judgment of the Regional Court, and referring the case back to that court for further proceedings. The question of whether the applicant carried out business transactions in the tax year 2005/2006 with a related party (Arrow International, Inc., hereinafter […]

Czech Republic vs. EWE s.r.o., June 2013, Supreme Administrative Court , Case No 7 Afs 48/2013 – 31

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EWE s.r.o first criticised the Regional Court for the lack of logical reasoning in the grounds of the judgment, based on evidence that it had established a legal relationship with another person mainly for the purpose of reducing the tax base. Although the facts adduced by the administrative court show that ‘some third parties’ created […]

Czech Republic vs. P. S., March 2013, Supreme Administrative Court , Case No 5 Afs 34/2012 – 65

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According to the tax authorities, the prices agreed between the P.S. and her husband, as lessors, and Long Wave, s.r.o. (‘Long Wave’), as lessee, differed from the prices which would have been agreed between independent persons in normal commercial relations under the same or similar conditions. According to the tax authorities, P.S., together with her […]

Czech Republic vs. Goldfein, March 2013, Supreme Administrative Court, No. 1 Afs 99/2012-52

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The Czech company, Goldfine, submitted a revised tax return lowering the taxable income for the year. The reason being that the German Parent had losses for the year. The Supreme Administrative Court found that the burden of proof related to arm’s length transfer prices, under those circumstances rests with the taxpayer. Losses at the German […]

Czech Republic vs. FISH MARKET a.s., January 2013, Supreme Administrative Court , Case No 1 Afs 101/2012 – 31

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FISH MARKET a.s. was engaged, among other things, in the sale of live freshwater fish and that the margin on sales to a related party (KOLTER, a.s.) was much lower than on sales to other independent companies. The tax authorities therefore began to examine the reasonableness of the difference in the agreed selling prices of […]

Czech Republic vs. Corp. February 2011, Supreme Administrative Court, Afs 19/2010-125

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A Czech company (the lessor) owned real estate and rented it to independent parties. An Austrian related company provided management and consulting services to the lessor The service fees significantly increased each year, although the income of the Czech company and the number of lease contracts were constant in the examined years The tax authorities […]

Czech Republic vs. DATON technology, spol. s.r.o., August 2010, Supreme Administrative Court , Case No 2 Afs 53/2010 – 63

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The tax authorities had increased the amount of the tax due to a change in the calculation of interest on loans granted by DATON technology to its partners (managing directors). At issue was whether the amount of the normal interest on loans granted by DATON technology to its managing directors should be determined on the […]

Czech Republic vs. B.p., s.r.o., June 2007, Supreme Administrative Court , Case No 8 Afs 152/2005 – 72

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The subject-matter of the dispute was the exclusion of the rent for lease of machinery and equipment. It referred to the lease and sublease agreements for non-residential premises, machinery and equipment with the companies B.p., s.r.o. and M.-T., s.r.o., by which the parties agreed that the objects of the lease agreements would be used free […]