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 of the LNC Group.

The court held that the tax authorities had not sufficiently dealt with the identification and description of the conditions under which the prices of the controlled transactions had been agreed. The tax authorities had not considered the “commercial strength” and “advertising capacity” of the parties.

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Czech 25Af_76_20200609112810.2019_prevedeno