Denmark vs Tetra Pak Processing Systems A/S, April 2021, Supreme Court, Case No BS-19502/2020-HJR

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The Danish tax authorities had made a discretionary assessment on the taxable income of Tetra Pak Processing Systems A/S due to inadequate transfer pricing documentation and ongoing losses.

The Supreme Court’s ruling.

The Supreme Court found that the TP documentation provided by the company did not meet the required standards. The TP documentation did not show how the prices between Tetra Pak and the sales companies had been determined and did not contain a comparability analysis as required by the current § 3 B, para. 5 of the Tax Control Act and Section 6 of the Danish administrative regulation on transfer pricing documentation.

Against this background, the Supreme Court found that the TP documentation was deficient to such an extent that it had to be equated with a lack of documentation. The Supreme Court agreed that Tetra Pak’s taxable income for the years 2005-2009 could be determined on a discretionary basis.

According to the Supreme Court, Tetra Pak had not proven that the tax authorities’ discretionary assessment was based on an incorrect or insufficient basis or that the assessment had led to a manifestly unreasonable result. Therefore, there was no basis for overturning the assessment.

The Supreme Court therefore upheld the prior High Court’s decision.

In the decision reference is made to OECD 2010 Transfer Pricing Guidelines

  • Importance of Transfer Pricing documentation and comparability analysis: Para 1.6, 2.22, 2.23, 2.78, 3.1, 3.22 and 5.17
  • Choice of tested party: Para 3.18
  • Exceptional and extraordinary costs and calculation of net profit indicator/profit level indicator: Para 2.80


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