France vs Reynolds Tobacco, Nov 1990, Administrative Court of Appeal, Case N° 89PA01172

« | »

In Reynolds Tobacco, the 2%-3% commission received was considered arm’s-length, even though competitors received 8% for providing similar services. The services provided by the French company were sufficiently different, and this justified the lower commission rate charged.

Excerpt from the Judgement

“...by virtue of a contract concluded between the two companies on 14 December 1976, Reynolds Tobacco France covers, on behalf of its parent company, the administrative costs entailed by its representation in France in return for a commission of 2 to 3% of the amount of sales; that by maintaining that companies with a similar or comparable activity are remunerated by a commission of the order of 8% without establishing that this rate remunerates services of the same nature, the administration does not provide proof of the transfer of profits that it alleges; that neither the fact that Reynolds Tobacco France considered renegotiating the terms of its contract with the German company, nor the fact that it considered increasing its capital to prevent losses from reaching three-quarters of its capital, are such as to make it possible to consider this proof as having been provided…

Click here for English translation

Click here for other translation

France vs Raynolds Tobacco

TP-Guidelines