Denmark vs. Codan Forsikring A/S, August 2022, Eastern High Court, Case no BS-11370/2020

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This case concerns pricing of four reinsurance agreements concluded between Codan Forsikring A/S (Codan) and a controlled Irish company, RSA Reinsurance Ireland Ltd. for FY 2010-2013.

The tax authorities had increased Codan’s taxable income for FY 2010, 2011 and 2012 by DKK 23 million, DKK 25 million, and DKK 18 million and reduced the taxable income for FY 2013 by DKK 4 million.

At issue was whether the expenses incurred by Codan under the reinsurance agreements with RSA Ireland were commercially justified and thus deductible. If so, there were questions as to whether the reinsurance agreements had been concluded at arm’s length.

By decision of 26 June 2019 the Tax Court reduced the assessment to DKK 0 for the 2010-2012 tax years and upheld Codan’s taxable income for FY 2013.

An appeal was filed by the tax authorities.

Judgement of the Eastern High Court

The High Court upheld the decision of the Tax Court and set aside the assessment of the tax authorities.

According to the Court the reinsurance agreements with the Irish subsidiary served a commercial purpose and there were no grounds for disallowing the resulting deductions.

The Court found that the transfer pricing documentation was not deficient to such an extent that it could be equated with a lack of documentation and that the pricing of the controlled reinsurance agreements were not outside the range of what could have been agreed between independent parties.


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Denmark vs Insurance 11370-2020

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