In this case intangibles had been transferred from a Danish subsidiary to a US parent under a written agreement. According to the agreement the Danish subsidiary – which had developed and used it’s own intangibles – would now have to pay royalties for the use of trademarks, know-how and patents owned by the US parent.
The tax authorities had issued an assesment on the grounds that the majority of the Danish company’s intangibles had been transferred to the US parent. In the assesment the value of the intangibles had been calculated based on the price paid when the US group acquired the shares in the Danish company.
H Group argued that the transferred intangibles no longer carried any value and that the Danish company now used intangibles owned by the US group.
The Tax Tribunal found that tax authorities had been entitled to make an assessment as the transaction had not been described in the Transfer pricing documentation. However, the Tribunal considered that the valuation based on the price paid when the US group acquired the shares in the Danish company was too uncertain and instead applied a relief-from-royalty method.Denmark vs H Group April 2019