Category: Transfer Pricing Documentation

In most countries transfer pricing documentation for MNE’s is required by law.

Transfer pricing documentation usually consists of a master file, a local file and a country by country report. These files and reports will provide tax authorities with a detailed description of the MNE and an in depth analysis of prices and terms applied to controlled transactions.

Norway vs Stanley Black & Decker Norway AS , December 2018, Borgarting Lagmannsrett, Case No 2016-105694

Norway vs Stanley Black & Decker Norway AS , December 2018, Borgarting Lagmannsrett, Case No 2016-105694

At issue was the transfer pricing method applied on transactions between Black & Deckers Norwegian distribution company and the group trading hub in Luxembourg, Black & Decker Ltd SARL. The Norwegian tax authorities in 2013 issued a tax assessment of Black and Decker Norway AS where the taxable income for years 2005 – 2008 was increased with a total amount of NOK 50 million. The assessment was appealed to the Tax Appeals Committee where the amount was reduced to a total of NOK 26 million in line with recommendations of the tax authorities during the proceedings. The decision of the Tax Appeals Committee was upheld by the District Court and later the Court of Appeal where the appeal of Black & Decker was rejected. Click here for translation Norway vs Black & Decker december 2018 case no LB-2016-105694 Share: ... Continue to full case
Denmark vs Microsoft Denmark, March 2018, Danish National Court, SKM2018.416.ØLR

Denmark vs Microsoft Denmark, March 2018, Danish National Court, SKM2018.416.ØLR

The Danish Tax Ministry and Microsoft meet in Court in a case where the Danish tax authorities had issued an assessment of DKK 308 million. The Danish tax authorities were of the opinion that Microsoft had not been properly remunerated for performing marketing activities due to the fact that OEM sales to Danish customers via MNE OEM’s had not been included in the calculation of local commissions. In court, Microsoft required a dismissal with reference to the fact that Sweden, Norway and Finland had either lost or resigned similar tax cases against Micorosoft. The National Court ruled in favor of Microsoft. The decision has now been appealed to the Supreme Court by the Danish tax ministery. Click here for translation DK vs MS Marketing-and Sales Commissioner Share: ... Continue to full case
Denmark vs. Danish Production A/S, Feb 2018, Tax Tribunal, SKM2018.62.LSR

Denmark vs. Danish Production A/S, Feb 2018, Tax Tribunal, SKM2018.62.LSR

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 insufficient and a significant part of the income in the foreign sales companies related to sale of goods not purchased from the Danish production company. Click here for translation SKM2018-62-LSR Share: ... Continue to full case
Denmark vs. Corp, March 2017, Tax Tribunal, SKM2017.187

Denmark vs. Corp, March 2017, Tax Tribunal, SKM2017.187

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) and section 5 3, where the TP documentation provided a sufficient basis for assessing whether prices and terms were in accordance with the arm’s length principle. According to the Tax Tribunal goodwill amortizations should not be included when comparing the operating income of the company to the operating income of independent parties in a database survey. Hence the assessment was reduced to DKK 0. The case has been appealed to the Danish National Court by the tax authorities ... Continue to full case
Russia vs Dulisma Oil, January 2017, Russian Court Case No. A40-123426 / 16-140-1066

Russia vs Dulisma Oil, January 2017, Russian Court Case No. A40-123426 / 16-140-1066

This case relates to sales of crude oil from the Russian company, Dulisma Oil,  to an unrelated trading company, Concept Oil Ltd, registered in Hong Kong. The Russian tax authorities found that the price at which oil was sold deviated from quotations published by the Platts price reporting agency. They found that the prices for particular deliveries had been lower than the arm’s length price and issued a tax assessment and penalties of RUB 177 million. Dulisma Oil had set the prices using quotations published by Platts, which is a common practice in crude oil trading. The contract price was determined as the mean of average quotations for Dubai crude on publication days agreed upon by the parties, minus a differential determined before the delivery date “on the basis of the situation prevailing on the market”. Transfer pricing documentation had not been prepared, and the company also failed ... Continue to full case
Denmark vs. Corp, December 2016, Tax Tribunal, SKM2017.115

Denmark vs. Corp, December 2016, Tax Tribunal, SKM2017.115

The 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 were made. Share: ... Continue to full case
Norway vs. Total E&P Norge AS, October 2015, Supreme Court  2014/498, ref no. HR-2015-00699-A

Norway vs. Total E&P Norge AS, October 2015, Supreme Court 2014/498, ref no. HR-2015-00699-A

Total 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 Supreme Court concluded that Total did not have a right to full access to the comparables. Although section 3-13 (4) of the Tax Assessment Act states that information subject to confidentiality may be given to third parties with the effect that such third parties are subject to the same duty of confidentiality, this rule could not, according to the Supreme Court, be applied in the present case. This was because the very point of the ... Continue to full case
Italy vs GE TRANSPORTATION SYSTEMS SPA, December 2014, Supreme Court 27296

Italy vs GE TRANSPORTATION SYSTEMS SPA, December 2014, Supreme Court 27296

In 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 the rights to manufacture and sell the products. These differences justified the different price and led to the incomparability of them. The Court concluded that a contract manufacturer cannot be compared to full-fledged manufacturers. The former is in a weak barganing position compared to the German principal. The principal is in fact the owner of all of the intangibles, and this puts the Italien contract manufacturer in a weaker barganing position compared to a full-fledged ... Continue to full case
Denmark vs. Bombardier, October 2013, Administrative Tax Court, SKM2014.53.LSR

Denmark vs. Bombardier, October 2013, Administrative Tax Court, SKM2014.53.LSR

The 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 0.25% was upheld. Third, the Court concluded that the rate on the short-term deposits and the corresponding loans (borrowed due to insufficient liquidity management) should be the same. The Administrative Tax Court observed that there was very little or no creditor risk on these gross corresponding loans/deposits because of the possibility of offsetting the balance. Hence, according to the Court, there was no basis for a spread on the gross balance. However, the rate spread ... Continue to full case
Germany vs. Corp. April 2013, Supreme Tax Court judgment I R 45/11

Germany vs. Corp. April 2013, Supreme Tax Court judgment I R 45/11

The 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 substantial fees to a Luxembourg service company. Both Luxembourg companies were wholly-owned by a Luxembourg holding company. The investment fund management company was obliged to follow the policies of the fund. These could only be revised by a two-thirds majority resolution of the investors. The German subsidiary argued that this restriction meant that its Luxembourg shareholder could not be forced to follow a common business policy with the service provider. Accordingly the two were not ... Continue to full case
Japan vs Manufacturing Co. March 2013, Tokyo High Court, No 19

Japan vs Manufacturing Co. March 2013, Tokyo High Court, No 19

A Japanese manufacturing company was issued an estimated tax assessment due to lack of transfer pricing documentation. The District Court ruled in favor of the tax authorities. The Court decided that accounts and documents necessary for calculating arms’s length prices should be presented or submitted to the tax authorities without delay. If sufficient documentation is not submitted, the requirement for an estimated taxation is satisfied. Furthermore, in such cases the burden of proof shifts to the taxpayer side. See the transcripts from the district Court below. The case was then appealed by the company to Tokyo High Court, which also ruled in favor of the tax authorities. Click here for translation Japan-vs-Manufacturing-Co.083647_hanrei See transcripts from the district Court below. Click here for translation – Part 1 Click here for translation – Part 2 Click here for translation – Part 3 Dokumentationssag-082362_hanrei Share: ... Continue to full case
Germany vs Doc GmbH , June 2011, Federal Tax Court, Case No X B 37/11

Germany vs Doc GmbH , June 2011, Federal Tax Court, Case No X B 37/11

In this case the Federal Tax Court confirmed the statutory authority of the tax authorities to issue penalties where a taxpayer have not fulfilled transfer pricing documentation requirement. Click here for translation BFH v 28 06 2011 - X B 37-11 Share: ... Continue to full case
US vs. BMC. January 1999

US vs. BMC. January 1999

The 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. US-BMC_decision_01081999 Share: ... Continue to full case
France vs SA Borsumij Whery France, Feb 1997, Adm Court of appeal, No 94PA00511

France vs SA Borsumij Whery France, Feb 1997, Adm Court of appeal, No 94PA00511

The 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 translation France vs SA Borsumij Whery France, Feb 1997, Adm Court of appeal, Share: ... Continue to full case