SSI Logistics’ transfer pricing documentation for 2012 and 2013 concluded that the interest rates on the loans it received from a related party – Bunge Finance BV – were market rates.
Following an audit, the tax authorities issued an assessment denying the deductibility of the interest payments on the loans, as the loans had been taken out on 25 November 2014 but “retroactively” with effect from 1 January 2012. In the assessment, the tax authorities also concluded that the interest rate on the loans was not at arm’s length.
SSI Logistics filed an appeal with the Administrative Court, which was later dismissed by a ruling issued in September 2022.
An appeal was then filed by SSI Logistics with the Administrative Court of Appeal.
Judgment of the Court.
The Court dismissed the appeal and upheld the decision of the Administrative Court.
Excerpt in English
“19. However, it is clear from the investigation that the amount shown in Bunge Finance BV’s accounting document, i.e. EUR 1,271,263.41, presented as corresponding to the interest received from SAS SSI Logistics for 2013, differs from the amount recorded in 2013 in SAS SSI Logistics‘ accounting records, even though the appellant company does not dispute that the opening and closing dates of the two companies’ financial years coincided in 2013 and that it is clear from the documents in the file that the 2013 financial year for both companies closed on 31 December 2013. Furthermore, this accounting document does not mention the origin of the amount booked. In these circumstances, even though SSI Logistics maintains that the tax result of Bunge Finance BV was taken into account within the tax unit that it forms with Koninklijke Bunge BV, for which no tax was ultimately paid due to the existence of tax losses carried forward, and that Koninklijke Bunge BV’s corporation tax settlement statement does not mention any tax due in respect of 2013, it does not follow from the investigation that the amount presented by the appellant company actually corresponded to an expense borne by SAS SSI Logistics.
20. It follows from the foregoing that SAS SSI Logistics does not demonstrate either on appeal or before the Administrative Court that the sum of 1,272,047 euros entered in its accounts was subject to income tax or tax on profits in an amount at least equal to one quarter of the tax on profits determined under the conditions of ordinary law. The tax authorities were therefore right to challenge, on the basis of tax law, the deductibility of the interest borne by SAS SSI Logistics in respect of the 2013 financial year on the basis of the aforementioned provisions of Article 212(1)(b) of the French General Tax Code.“
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