The tax authority had increased Holding A/S’s taxable income by DKK 6,462,734 for the 2014 income year, as the establishment of a loan agreement resulting from a share transaction had not been recognised for tax purposes. The amount related to calculated interest on a claim of DKK 100 million according to a promissory note issued by three companies to settle the purchase price for Holding A/S’s 50% shareholding in a foreign company. Subsequently, the three purchasing companies resold the shares in the foreign company to H8 ApS. H8 ApS was ultimately owned through companies by the same group of persons who owned Holding A/S and the first three purchasing companies. H8 ApS corrected the purchase price for the shares by entering into the issued promissory note of DKK 100 million, including accrued interest of approximately DKK 6.5 million. Decision The Tax Tribunal upheld the tax ... Continue to full case

The case concerns “Tobacco BV”, a Dutch company that is part of an international group. Tobacco BV entered into a factoring arrangement with an affiliated entity based in a low-tax jurisdiction. Under this arrangement, Tobacco BV transferred its receivables to the affiliate in exchange for factoring fees. The tax authorities challenged the arrangement, arguing that the fees and payments reduced the Dutch taxable base and shifted profits to a low-tax country. Tobacco BV defended the arrangement by submitting transfer pricing documentation and comparability studies to demonstrate that the factoring fees were consistent with the arm’s length principle. The Amsterdam Court of Appeal accepted this defence and ruled in favour of Tobacco BV, holding that the company had sufficiently demonstrated that the agreement was commercially justifiable and aligned with arm’s length conditions. The tax authorities then appealed to the Supreme Court. Judgment The Supreme Court therefore ... Continue to full case

The tax authorities issued an assessment against Prysmian s.p.a. for 2012, raising two adjustments: one for over €13 million relating to income attributable to its Singapore subsidiary, Draka Cableteq Asia Pacific Holding, under Italy’s CFC rules, and another for over €1 million relating to transfer pricing. However, on appeal the Provincial Tax Commission annulled the latter adjustment because the disputed transactions were purely domestic, taking place between Prysmian s.p.a. and its Italian subsidiary PCS. Therefore, they were not subject to italian transfer pricing rules. However, the Commission upheld the CFC adjustment. On appeal, the Regional Tax Commission reversed this decision, fully confirming the original assessment. It held that services invoiced by Prysmian to PCS were merely passed on by PCS to foreign subsidiaries, rendering PCS a passive conduit. The Regional Tax Commission did not explicitly rule on the cross-appeal filed by Prysmian against the CFC ... Continue to full case

In 2011, J.C.I. BV took out an 800 million euro loan at an interest rate of 7.22% from J.C.L.F. Sarl (hereafter referred to as ‘J.C.L.F.’), a Luxembourg company that operates through its US branch. Both J.C.I. BV and J.C.L.F. Sarl are part of the J.C. Group. J.C.I. BV repaid the loan in December 2016. As a result, it paid J.C.L.F. interest amounting to €38,025,033.33, corresponding to an annual interest rate of 7.22%. In 2019, J.C.I. BV received a notice of amendment to the corporation tax return for FY 2016. The tax authorities challenged several aspects of J.C.I. BV’s intra-group financing and dividend structures. With regard to transfer pricing, the tax authorities claimed that an interest rate of 7.22% on a 2011 loan exceeded the arm’s length interest rate. They also claimed that certain intra-group arrangements created abnormal advantages and that profits were funnelled through UK ... Continue to full case

“EQ LUX” had classified its interest-free intra-group contributions as loans for tax purposes and treated a Malaysian branch with very limited substance as a permanent establishment. The tax authorities reclassified the loans as equity and denied permanent-establishment status to the branch. “EQ LUX” appealed to the Administrative Tribunal, which in May 2024 dismissed the appeal and upheld the additional-tax assessment issued by the authorities. A further appeal was lodged with the Administrative Court. Judgment The Administrative Court upheld the Tribunal’s decision and ruled in favour of the tax authorities. Applying the substance-over-form doctrine, the Court confirmed that the “loans” were, in substance, equity: they financed long-term assets, produced an excessive debt-to-equity ratio, lacked genuine repayment guarantees and, in their economic context, behaved like capital. The Court dismissed the taxpayer’s reliance on Luxembourg’s informal 85/15 leverage guideline and rejected the submitted transfer-pricing study for failing to ... Continue to full case

The case concerned the tax treatment of a €5.3 million capital loss incurred by “A Share-loss S.A.” on the transfer of shares to a related group entity. The loss had been disallowed for tax deduction by the tax authorities under Article 23(7) of the Portuguese Corporate Income Tax Code (IRC), an anti-avoidance provision which prohibits the deductibility of capital losses from share transfers between related parties. contested this rule on constitutional grounds, arguing that Article 23(7) violates three constitutional principles: (1) taxation according to actual profit, (2) proportionality , and (3) equality. It claimed that the rule acts as an irrebuttable presumption that all such transactions are abusive, even if conducted at market value and for valid economic reasons, and that it unfairly penalizes intra-group transactions compared to those with unrelated parties. Judgment The Constitutional Court dismissed the appeal of “A Share-loss S.A.” and upheld ... Continue to full case

Nutreco España, S.A. had taken on significant debt to finance an acquisition of shares by other foreign group companies. Its role in the acquisition was limited to the channelling of funds. The debt consisted of an intercompany loan of 240 million euros granted by Nutreco Nederland B.V. and an amount of 100 million euros from a centralised treasury system (cash pool) within the Group. Interest payments on these loans totalled more than 30 million euros for the years 2011-2013, which Nutreco España, S.A. deducted from its taxable income. The tax authorities found that the financial arrangement was artificial and put in place only for the purpose of obtaining tax benefits. Deductions of expenses related to the debt was therefore denied and an assessment of additional taxable income issued. An appeal was filed Nutreco España, S.A. that ultimately ended up in the Supreme Court after being ... Continue to full case

Iprona SpA is an Italian company that sells fruit extract powder. It had sold products to an Austrian subsidiary at a price that was nearly tripled when the goods were quickly resold through related companies before reaching a final buyer in Liechtenstein. The tax authorities argued that the final price received by the Liechtenstein company should have been treated as the “normal value” of the initial sale from Iprona SpA, indicating an artificial profit shift. A tax assessment was issued on this basis. The case ended up in the Supreme Court. Judgment The Supreme Court decided that Iprona SpA had not applied the arm’s length principle correctly. The Court emphasized that, to establish normal value for transfer pricing purposes, one can rely on various complementary methods under both domestic law and OECD guidelines, such as the resale price method. The tax authority had shown that ... Continue to full case

“Health & Beauty AG” acted as a holding company within a larger international group. It had acquired 51% of the shares in I-GmbH in 2003 and the remaining 49% in 2009 from two Irish investment companies. The acquisition of the remaining shares was financed by a €12.4 million loan from A-BV at an interest rate of 7.855%. The loan was repaid early in 2013-2014 and interest expenses were claimed for the years 2009 to 2011. It had also deducted interest expences related to financing of subsidiaries in Spain and Italy. The tax authorities disallowed the deduction of these interest payments and an appeal was lodged, which ended up at the Austrian Federal Finance Court. Decision The court found that the loan agreement regarding the Acquisition of I-Gmbh was properly documented and at arm’s length and therefore the interest was deductible. It also concluded that “Health ... Continue to full case

Singapore Telecom Australia Investments Pty Ltd entered into a loan note issuance agreement (the LNIA) with a company (the subscriber) that was resident in Singapore. Singapore Telecom Australia and the subscriber were ultimately 100% owned by the same company. The total amount of loan notes issued to the Participant was approximately USD 5.2 billion. The terms of the LNIA have been amended on three occasions, the first and second amendments being effective from the date the LNIA was originally entered into. The interest rate under the LNIA as amended by the third amendment was 13.2575%. Following an audit, the tax authorities issued an assessment under the transfer pricing provisions and disallowed interest deductions totalling approximately USD 894 million in respect of four years of income. In the view of the tax authorities, the terms agreed between the parties deviated from the arm’s length principle. Singapore ... Continue to full case

“NAILS KtF” is a member of a group engaged in the development, manufacture and sale of artificial nail materials. It sells products to related parties and pays a fee to a related party for the use of trademarks and know-how related to the products. It had also paid a related party in Cyprus for certain services. Following an audit, the tax authorities issued an assessment relating to the pricing of the royalty transaction, the sale of goods and penalties relating to tax evasion through reclassification and lack of documentation for the services. “Nails KtF” filed an appeal, which ended up in the Supreme Administrative Court. Among the arguments put forward by “Nails KtF” in the appeal was the fact that the tax authorities had used an external expert to determine the arm’s length royalty rate, which “Nails KtF” argued was a delegation of power in ... Continue to full case

December 31, 2008 “A Mining S.A.” sold a mine wash plant to Company B, with which it was associated until December 23, 2008. The sale of the plant was negotiated in parallel with various share acquisition negotiations, etc. The tax authorities considered the sale of the wash plant to be a controlled transaction because the agreement was negotiated while the parties were still related. On this basis, the agreed price for the washing plant was adjusted based on the CUP method in accordance with Portuguese arm’s length rules. The resulting assessment issued by the tax authorities was later confirmed by the Administrative Court. “A Mining S.A.” then appealed to the Supreme Administrative Court. Judgment The Supreme Administrative Court ruled in favor of “A Mining S.A.”, overturning the decision of the Administrative Court and annulling the assessment issued by the tax authorities. Excerpt in English “We ... Continue to full case

“DCF AG” had acquired 52.99% of the shares in a Turkish company from a related party for a purchase price of EUR 116,599,677. The Austrian tax authority believed the agreed price was not at arm’s length, pointing to a significantly lower price paid by a Turkish buyer for a 15% share shortly beforehand and alleging that the taxpayer should have realized the valuation was excessive. In its defence “DCF AG” relied on two independent valuation reports that used recognized DCF methods, explained why the earlier third-party sale was not a valid comparison, and showed that at the time of purchase there were strong indications the target’s sales and profits would grow. Judgment The Court ruled in favour of “DCF AG”. The Court noted that expert opinions based on recognized valuation standards (in this case, DCF analyses by KPMG Turkey and Deloitte Turkey) confirmed the appropriateness ... Continue to full case

In 1991 and 2007, Ireland issued two tax rulings in relation to two companies of the Apple Group (Apple Sales International – ASI and Apple Operations Europe – AOE), incorporated under Irish law but not tax resident in Ireland. The rulings approved the method by which ASI and AOE proposed to determine their chargeable profits in Ireland deriving from the activity of their Irish branches. In 2016, the European Commission considered that the tax rulings, by excluding from the tax base the profits deriving from the use of intellectual property licences held by ASI and AOE, granted those companies, between 1991 and 2014, State aid that was unlawful and incompatible with the internal market and from which the Apple Group as a whole had benefitted, and ordered Ireland to recover that aid. In 2020, on the application of Ireland and ASI and AOE, the General ... Continue to full case

Vernay Europa B.V. had received dividends from its Italian subsidiary in the years 2013 to 2016 and requested a refund of withholding taxes in Italy based on the EU Parent-Subsidiary Directive. The claim was rejected by the Italian tax authorities. An appeal was made to the Supreme Court. Judgment The Supreme Court ruled in favour of Vernay Europa B.V. Beneficial ownership requires the satisfaction of three tests: 1. the substantive business test, 2. the control test and 3. the business purpose test. The Court found that Vernay Europa B.V. had been established in the Netherlands prior to the adoption of the Parent-Subsidiary Directive and that it had a real business activity. Furthermore, Vernay Europa B.V. retained a substantial part of the dividends received. Based on these facts, the Supreme Court upheld the appeal of Vernay Europa B.V. and referred the case back to the Court ... Continue to full case

In this case the Uganda Revenue Authority (URA) sought to lift the corporate veils of five companies—Crane Autos Ltd (in liquidation), Kampala Properties Ltd, Punjani Motors Ltd, East African Motor Supplies Ltd, and Autotune & Engineering Ltd—alleging they were associated entities used in a tax evasion scheme. URA claimed that Crane Autos owed over UGX 20 billion in unpaid taxes stemming from transactions through its Dubai branch, and that the other four companies had been used to conceal assets and frustrate tax recovery. Judgment The High Court found that although the corporate veil should only be pierced in exceptional cases involving misuse of the corporate form to commit fraud or evade obligations, this was one such case. The evidence showed that the five companies shared common ownership, directors, employees, and addresses, and that transactions—particularly involving the resale of Ural trucks to East African security forces—were ... Continue to full case

Howmet, a société par actions simplifiée (SAS), is the head of a tax group in which its subsidiary, Alcoa Holding France, now Arconic Holding France (AHF), is integrated. Following an audit of the accounts of these two companies, the tax authorities corrected their taxable profits for the 2011 and 2012 financial years  by disregarding the consequences of a contribution made to the Belgian company Alcoa Wheels Product Belgium (AWPB), now Alcoa Finance and Services Belgium (AFSB), of sums borrowed from the Swiss permanent establishment of a Luxembourg company belonging to the same economic group. It also reinstated the management fees paid by AHF to the group’s American parent company, Alcoa Inc., in AHF’s profits for the 2010 and 2011 financial years. In a ruling handed down on 19 November 2020, the Montreuil Administrative Court upheld Howmet’s claim for discharge of the additional corporate tax resulting ... Continue to full case

D. Sp. z oo had deducted interest expenses on intra-group loans and expenses related to intra-group services in its taxable income for FY 2015. The loans and services had been provided by a related party in Delaware, USA. Following a inspection, the tax authority issued an assessment where deductions for these costs had been denied resulting in additional taxable income. In regards to the interest expenses the authority held that the circumstances of the transactions indicated that they were made primarily in order to achieve a tax advantage contrary to the object and purpose of the Tax Act (reduction of the tax base by creating a tax cost in the form of interest on loans to finance the purchase of own assets), and the modus operandi of the participating entities was artificial, since under normal trading conditions economic operators, guided primarily by economic objectives and ... Continue to full case

The Revenue raised an additional assessment on gain received from the transfer of technical know-how by Keysight Technologies to Agilent Technologies International for the amount of RM821,615,000.00 being income under section 4(f) of the Income Tax Act 1967 (ITA 1967) together with the penalty under section 113(2) ITA 1967. The Revenue contended that subsection 91(3) of the ITA 1967 provided that the Revenue may issue an assessment after the expiration of the time period of 5 years on grounds of fraud or willful default or negligence. The findings of negligence on the part of Keysight Technologies include failure to support the claim that the gain from the transfer of technical knowhow (i.e. the marketing and manufacturing intangibles) by Keysight Technologies to Agilent Technologies International was an outright sale and failure to furnish the document and information as requested by the Revenue in the audit letter ... Continue to full case

The case arose from an audit which found that an electricity producer had ‘distributed hidden profits through transfer pricing’ by allowing shareholders to retain unpaid capital increase commitments, which was allegedly a financing service for which no interest was charged. Based on this, the tax authorities issued an adjusted tax assessment. On appeal, the first instance court annulled the adjustment, but later the Regional Administrative Court reversed this decision, reasoning that the company should have charged interest and that not doing so constituted hidden profit distribution. Judgment The Council of State accepted the taxpayer’s appeal, overturned the Regional Administrative Court’s decision and rejected the tax authorities’ transfer pricing theory based on unpaid capital. The Council noted that applying hidden profit rules where no benefit is obtained would contradict the purpose of those rules. The Council of State held that Article 13 of Corporate Tax Law ... Continue to full case