Court result: Remanded to lower court for further considerations

Italy vs Prinoth S.p.A., December 2022, Supreme Administrative Court, Case No 36275/2022

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Prinoth S.p.A. is an Italian manufacturer of snow groomers and tracked vehicles. For a number of years the parent company had been suffering losses while the distribution subsidiaries in the group had substantial profits. Following an audit the tax authorities concluded that the transfer prices applied between the parent company and the distributors in the […]

Italy vs Quaker Italia Srl, November 2022, Supreme Administrative Court, Case No 34728/2022

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Quaker Italia Srl is a non-exclusive distributor of Quaker products in Italy – lubricating oils and greases. It also carries out a minor manufacturing activity. An assessment was issued by the tax authorities in 2012 regarding the remuneration received for the distribution activities in FY 2007. The Tax authorities considered that the documentation provided by […]

Poland vs “H. LVAS Sp. z oo”, September 2022, Administrative Court, Case No I SA / Go 234/22

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“H. LVAS Sp. z oo” had deducted expenses related to intra-group services in its taxable income. The services had been provided by its German parent company, H. GmbH. The services (supervision and management support, coordination of projects, support in accounting, controlling, IT and personnel) had been classified by the group as low value-added services. Following […]

US vs Medtronic, August 2022, U.S. Tax Court, T.C. Memo. 2022-84

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Medtronic had used the comparable uncontrolled transactions (CUT) method to determine the arm’s length royalty rates received from its manufacturing subsidiary in Puerto Rico for use of IP under an inter-group license agreement. The tax authorities found that Medtronic left too much profit in Puerto Rico. Using a “modified CPM” the IRS concluded that at […]

Korea vs “Semicon-sales”, June 2022, Tax Court, Case No 2020-서-2311

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A Korean subsidiary (“Semicon-sales”) of a foreign group was active in distribution and sales of semiconductors for the automotive and industrial industry. Following an audit, the tax authorities found that the subsidiary had purchased semiconductors from a foreign affiliated company at a higher price than the arm’s length price. An assessment was issued where the […]

Sweden vs Swedish Match Intellectual Property AB, May 2022, Supreme Administrative Court, Case No Mål: 5264–5267-20, 5269-20

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At issue was whether the acquisition value of an inventory acquired from a related company should be adjusted on the basis of Swedish arm’s length provisions or alternatively tax avoidance provisions According to the arm’s length rule in Chapter 18, Section 11 of the Income Tax Act, the acquisition value is to be adjusted to […]

Poland vs “Fertilizer Licence SA”, April 2022, Provincial Administrative Court, Case No I SA/Po 788/21

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“Fertilizer Licence SA” (“A”) transferred its trademarks to “B” in 2013, previously financed the transfer through a cash contribution, and then, following the transfer, paid royalties to “A” in exchange for the ability to use the assets. According to the tax authorities, a situation where an entity transfers its assets to another entity, finances the […]

India vs Olympus Medical Systems India Pvt. Ltd., April 2022, Income Tax Appellate Tribunal – New Delhi, Case No 838/DEL/2021

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Olympus Medical Systems India is a subsidiary of Olympus Corp and engaged in the import, sale and maintenance of medical equipment in India. For FY 2012 and 2013 the company reported losses. An transfer pricing audit was initiated by the tax authorities and later an assessment was issued. Since Olympus India had failed to provide […]

Italy vs Mauser S.p.A., February 2022, Supreme Court, Case No 6283/2022

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Following an audit, Mauser S.p.A. received four notices of assessment relating to the tax periods from 2004 to 2007. These notices contested, in relation to all tax periods, the elusive purpose of a financing operation of Mauser S.p.A. by the non-resident parent company, as it was aimed at circumventing the non-deductibility of interest expense pursuant […]

Korea vs Microsoft, February 2022, Supreme Court, Case no. 2019두50946

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In 2011 Samsung signed the contract with Microsoft for use of software-patent in Android-based smartphone and tablets, and for the years 2012-2015 Samsung paid royalties to a Microsoft subsidiary, MS Licensing GP, while saving 15 percent for withholding tax. The royalties paid by Samsung to Microsoft during these years amounted to 4.35 trillion won, of […]

Italy vs BenQ Italy SRL, March 2021, Corte di Cassazione, Sez. 5 Num. 1374 Anno 2022

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BenQ Italy SRL is part of a multinational group headed by the Taiwanese company BenQ Corporation that sells and markets technology products, consumer electronics, computing and communications devices. BenQ Italy’s immediate parent company was a Dutch company, BenQ Europe PV. Following an audit the tax authorities issued a notice of assessment for FY 2003 in […]

European Commission vs. Belgium, September 2021, The European Court of Justice, Case No. C‑337/19 P

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Since 2005, Belgium has applied a system of exemptions for the excess profit of Belgian entities which form part of multinational corporate groups. Those entities were able to obtain a tax ruling from the Belgian tax authorities, if they could demonstrate the existence of a new situation, such as a reorganisation leading to the relocation […]

Italy vs NEOPOST ITALIA s.r.l. (QUADIENT ITALY s.r.l.), September 2021, Supreme Court, Case No 25025/2021

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Neopost Italia s.r.l. had paid service fees and royalties to its French parent. Following an audit, deductions for these intra-group transactions was adjusted by the tax authorities due to non compliance with the arm’s length principle and lack of documentation. However, for the purpose of determining an arm’s length remuneration a benchmark study had been […]

Austria vs. “Yogo Food-Distributor”, August 2021, Bundesfinanzgericht, Case No RV/3100163/2018

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“Yogo Food-Distributor” is a subsidiary in the “Yogo Group” and trades in spices and canned meat and vegetables from the territory of the former Yugoslavia. The main sales markets are Austria and Germany (90%), the remainder being distributed among France, Scandinavia, Great Britain and the Benelux countries. Following an audit the tax authorities issued an […]

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 […]

France vs Genefinance (Interga), July 2021, Conseil d’Etat, Case No. 434268

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Genefinance – previously Interga – carried out a credit risk guarantee activity for the benefit of certain foreign branches and subsidiaries of the Société Générale group to which it belonged. Following an audit, the tax authorities considered the amount of premiums paid by foreign entities in 2008 and 2009 to be insufficient in relation to […]

Bulgaria vs Montupet, January 2021, Supreme Administrative Court, Case No 630

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Montupet EOOD is a Bulgarian subsidiary in the French Montupet Group which specializes in the production of aluminum components for the automotive industry. In February 2016, the French Group became part of the Canadian LINAMAR Group, which specializes in the manufacture and assembly of components for the automotive industry. The French group and its production […]

Netherlands vs X B.V., December 2020, Supreme Court (Preliminary ruling by the Advocate General), Case No 20/02096 ECLI:NL:PHR:2020:1198

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This case concerns a private equity takeover structure with apparently an intended international mismatch, i.e. a deduction/no inclusion of the remuneration on the provision of funds. The case was (primarily) decided by the Court of Appeal on the basis of non-business loan case law. The facts are as follows: A private equity fund [A] raised […]

Romania vs Lender A. SA, December 2020, Supreme Court, Case No 6512/2020

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In this case, A. S.A. had granted interest free loans to an affiliate company – Poiana Ciucas S.A. The tax authorities issued an assessment of non-realised income from loans granted. The tax authorities established that the average interest rates charged for comparable loans granted by credit institutions in Romania ranged from 5.45% to 19.39%. The […]

France vs Ferragamo France, November 2020, Conseil d’Etat, Case No 425577

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Ferragamo France, which was set up in 1992 and is wholly owned by the Dutch company Ferragamo International BV, which in turn is owned by the Italian company Salvatore Ferragamo Spa, carries on the business of retailing shoes, leather goods and luxury accessories and distributes, in shops in France, products under the ‘Salvatore Ferragamo’ brand, […]

Italy vs Spazio Immobiliare 2000 s.r.l., September 2020, Supreme Court, Cases No 20823/2020

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The facts underlying the notice of assessment are undisputed: a) Casa di Cura Santa Rita s.p.a. grants a free loan to Spazio Immobiliare 2000 s.r.l.; b) the latter company, substantially lacking its own means and wholly controlled by the former, uses the parent company’s loan in full to purchase certain assets; c) said assets are […]

Bulgaria vs “Beltart Manufacturing”, May 2020, Supreme Administrative Court, Case No 5756

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“Beltart Manufacturing” is a Bulgarian toll-manufacturer of of clothing accessories – trouser belts etc. – and is a member of the German Beltart Group. The remuneration for the manufactoring services provided to the group for 2013 and 2014 had been lower than for previous years. According to the company this was due to changes to […]

Hungary vs “Auto Parts Ktf”, May 2020, Supreme Court (Kúria), Case No. Kfv.I. 35,618 / 2019/11

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Auto Parts Ktf’s principal activity is the manufacture and sale of passenger cars and spare parts. Between 1 January 2013 and 31 December 2014, it sold its products to its affiliated undertakings and to unrelated parties. Auto Parts Ktf had prepared transfer pricing documentation, in which it determined the arm’s length price using the transaction […]

Greece vs S.p.A. ST. MEDICAL, May 2020, Supreme Administrative Court, Case No A 984/2020

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Following an audit the tax authorities issued a tax assessment and a substantial fine to S.p.A. ST. MEDICAL related to costs deducted in FY 2009, which the tax authorities claimed were partially fictitious. “the Economic Police carried out, on 22.10.2012, a tax audit of the appellant, which, during the contested management period (1.1.-31.12.2009), had as […]

Greece vs S.p.A. ST. MEDICAL, May 2020, Supreme Administrative Court, Case No A 985/2020

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Following an audit the tax authorities issued a tax assessment and a substantial fine to S.p.A. ST. MEDICAL related to costs deducted in FY 2010, which the tax authorities claimed were partially fictitious. “the Economic Police carried out, on 22.10.2012, a tax audit of the appellant, which, during the contested management period (1.1.-31.12.2010), had as […]

Hungary vs “Auto Parts Ktf”, May 2019, Administrative Court, Case No. 1.K.27.084 / 2019

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Auto Parts Ktf’s principal activity is the manufacture and sale of passenger cars and spare parts. Between 1 January 2013 and 31 December 2014, it sold its products to its affiliated undertakings and to unrelated parties. Auto Parts Ktf had prepared transfer pricing documentation, in which it determined the arm’s length price using the transaction […]

Germany vs “Waiver KG”, February 2019, Bundesfinanzhof, Case No I R 51/17

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Waiver KG had an outstanding (non-interest-bearing and unsecured) trade receivable of EUR 2,560,000 from a wholly-owned subsidiary in China related to deliveries made in FY 2004 and 2005. Waiver KG had first issued a partial waiver (EUR 560,000) on the receivable and then a complete waiver in December 2008, after a partial write-down had previously […]

Italy vs P.V. s.r.l., December 2018, Supreme Administrative Court, Case No 33594/2018

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The regional court had set aside an assessment issued by the tax authorities concerning controlled transaction between P.V. s.r.l. and related parties. An appeal was filed by the tax authorities with the Supreme Administrative Court. Judgement of the Court The Supreme Administrative Court set aside the decision of regional court and referred the case back […]

Italy vs Haier Europe Trading Srl , November 2018, Supreme Court, Case No 28337/2018

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Haier Europe Trading Srl, an Italien subsidiary of the Chinese Haier group (active within home appliances and consumer electronics), challenged an assessment for FY 2007, with which the tax authorities had recovered for taxation the difference with respect to the normal value in relation to transactions of goods with other companies of the group not […]

Italy vs Edison s.p.a. April 2016, Supreme Court no 7493

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The Italien company had qualified a funding arrangement in an amount of Lira 500 billion classified by the parties as a non-interest-bearing contribution reserved for a future capital increase. Judgement of the Supreme Court The Italian Supreme Court found that intra-group financing agreements are subject to transfer pricing legislation and that non-interest-bearing financing is generally […]

Bulgaria vs “K-Bul”, March 2016, Supreme Administrative Court, Case No 2690

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K-Bul is a Bulgarian subsidiary in the K Group. In the years 2007 to 2013 certain financial intra-group contracts were entered (Two financial service contract – concluded on 02.10.2007 and a Loan agreement concluded on 26.01.2010). Following an audit, the market interest rate was determined by the tax authorities on the basis of the Bulgarian […]

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 […]

Latvia vs SIA Rimi Baltic, November 2014, Supreme Administrative Court, Case No A420607511 SKA – 544/2014

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Following an audit, the tax authorities issued an assessment of additional taxable income to Rimi Baltic for FY 2009. According to the tax authorities Rimi Baltic had not included interest on deposits placed at the disposal of a related Swedish company, ICA Finans AB, in its taxable income. An appeal was filed with the Regional […]

Netherlands vs “X B.V.”, March 2013, Supreme Court, Case No 11/02248, ECLI:NL:HR:2013:BW6552

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The application of the WEV (waarde in het economische verkeer) rule is particularly relevant if the non-corporate loan is interest-free or the agreed interest is owed. The interest to be taken into account for tax purposes is then determined on the market value of each interest period at the time it falls due. The assessment […]

Latvia vs “Snickers Production Latvia”, April 2011, Supreme Administrative Court, Case No A42435608 SKA-134/2011

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This case concerns a transfer pricing dispute between the Latvian tax authorities (SRS) and a Latvian manufacturing company, “Snickers Production Latvia”, related to a credit notes issued to Snickers Europe AB, reducing its taxable profits. For the purpose of establishing the pricing of controlled transactions the company had used the TNMM method and performed a […]

Austria vs A & W AG, October 2009, Verwaltungsgerichtshof, Case No 2006/13/0116

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A & W AG, a company based in Germany, had maintained a permanent establishment in Austria which provided “distribution and support of software” services. No profits had been attributed to the Austrian permanent establishment. An assessment was issued where profits for FY 1998 to 2002 had been determined by the tax authorities using the cost […]