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Database of Transfer Pricing Case Laws

Greece vs “Clothing Distributor Ltd.”, June 2022, Administrative Tribunal, Case No 2400/2022

Posted on June 27, 2022 | By Courts of Greece | No comments

Category: Benchmark, Range and Median, Comparability Analysis, Losses, Transfer Pricing Methods | Tag: Adjustment to median, Aggregation, Benchmark study, Berry ratio, Choice of tested party, Distributor, Geographic comparability, Internal comparables, Local comparables, Losses, Most appropriate method (MAM), Transactional net margin method (TNMM)

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Following an audit, the Greek tax authorities determined that the remuneration of a Greek Clothing Distributor had not been determined in accordance with the arm’s length principle. On that basis an upwards adjustment of the taxable income was issued.

An appeal was filed by “Clothing Distributor Ltd.”

Judgment of the Tribunal

The Tribunal dismissed the appeal and upheld the assessment issued by the tax authorities.

“the findings of the audit, as recorded in the partial income tax audit report of 29/12/2021 of the C.E.M.E.P., on which the contested act is based, are considered valid, acceptable and fully justified”

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Related Guidelines

OECD COVID-19 TPG paragraph 32For example, assume that geographic comparability is deemed as the most relevant comparability factor given the nature of the effects of COVID-19 in a particular market. In these circumstances, in order to obtain reliable data from a particular market it may potentially be necessary to relax other comparability criteria, and...

TPG2022 Chapter II paragraph 2.108A situation where Berry ratios can prove useful is for intermediary activities where a taxpayer purchases goods from an associated enterprise and on-sells them to other associated enterprises. In such cases, the resale price method may not be applicable given the absence of uncontrolled sales, and a cost plus method...

TPG2022 Chapter II paragraph 2.107The selection of the appropriate financial indicator depends on the facts and circumstances of the case, see paragraph 2.82. Concerns have been expressed that Berry ratios are sometimes used in cases where they are not appropriate without the caution that is necessary in the selection and determination of any transfer...

TPG2022 Chapter II paragraph 2.106“Berry ratios” are defined as ratios of gross profit to operating expenses. Interest and extraneous income are generally excluded from the gross profit determination; depreciation and amortisation may or may not be included in the operating expenses, depending in particular on the possible uncertainties they can create in relation to...

OECD COVID-19 TPG paragraph 31The COVID-19 pandemic has created economic conditions that often differ from those of previous years. In these circumstances, where a taxpayer rolls forward an existing set of comparables to cover FY2020, it may be necessary to review the suitability of these existing comparables and potentially in some cases, it may...

OECD COVID-19 TPG paragraph 33In general, there is no overriding rule on the inclusion or exclusion of loss making comparables in the OECD TPG.15 Accordingly, loss-making comparables that satisfy the comparability criteria in a particular case should not be rejected on the sole basis that they suffer losses in periods affected by the COVID-19...

TPG2022 Chapter III paragraph 3.79The use of multiple year data does not necessarily imply the use of multiple year averages. Multiple year data and averages can however be used in some circumstances to improve reliability of the range. See paragraphs 3.57-3.62 for a discussion of statistical tools....

TPG2022 Chapter III paragraph 3.76In order to obtain a complete understanding of the facts and circumstances surrounding the controlled transaction, it generally might be useful to examine data from both the year under examination and prior years. The analysis of such information might disclose facts that may have influenced (or should have influenced) the...

TPG2022 Chapter III paragraph 3.65Generally speaking, a loss-making uncontrolled transaction should trigger further investigation in order to establish whether or not it can be a comparable. Circumstances in which loss-making transactions/ enterprises should be excluded from the list of comparables include cases where losses do not reflect normal business conditions, and where the losses...

TPG2022 Chapter III paragraph 3.64An independent enterprise would not continue loss-generating activities unless it had reasonable expectations of future profits. See paragraphs 1.149-1.151. Simple or low risk functions in particular are not expected to generate losses for a long period of time. This does not mean however that loss-making transactions can never be comparable....

Supplemental Guidance

Zambia vs Nestlé Zambia Limited, August 2025, Supreme Court, Case No 03-2021Nestlé Zambia Limited recorded continuous losses, prompting the Zambia Revenue Authority to issue a transfer pricing assessment. The Tax Appeals Tribunal had invalidated the assessment over unsuitable comparables and methods. On appeal, the Zambia Supreme Court ruled in 2025 that the burden of proof rests with the taxpayer to disprove...

Greece vs “Marine Fuel Ltd”, January 2022, Administrative Tribunal, Case No 36/2022A Greek marine fuel company was audited for FY 2015, with tax authorities rejecting its chosen CUP method and applying TNMM instead, resulting in an upward transfer pricing adjustment. The company challenged the assessment before the Dispute Settlement Board, which dismissed the complaint and upheld the tax authority's position, confirming...

Greece vs “Pharma Distributor Ltd.”, November 2022, Administrative Tribunal, Case No ΔΕΔ 3712/2022A Greek pharmaceutical distributor applied the resale price method for its intra-group sales and service activities, but the tax authorities rejected this in favour of TNMM and issued an additional taxable income assessment. The Administrative Tribunal largely upheld the assessment for sales activities, finding the company's net profit margin fell...

Colombia vs Masterfoods Colombia Ltda, Effem Colombia Ltda, February 2024, Supreme Administrative Court, Case No. 08001-23-33-000-2015-02445-01 (24364)Colombia's Supreme Administrative Court upheld the annulment of a transfer pricing assessment against Masterfoods Colombia for FY2008. The tax authority had replaced the taxpayer's transactional net margin method with the cost-plus method and adjusted results to the median of the interquartile range. The court found the authority's method and comparables...

Panama vs “Panamá Fertilizer S.A.”, December 2019, Administrative Tribunal, Case No TAT-RF-105 (EXPEDIENTE: 216-17)A Panamanian fertiliser distributor purchased agrochemicals from affiliates and used its Costa Rican subsidiary as the tested party under TNMM. The tax authority insisted the Panamanian entity must be tested and applied the resale price method using a single local comparable. Panama's Administrative Tribunal agreed the tested party must be...

Greece vs “Diary Distributor Ltd.”, November 2021, Administrative Tribunal, Case No 579/2021A Greek dairy distributor was audited by the tax authorities, who determined that prices paid to related parties in FY 2017 exceeded the arm's length range and issued an upward taxable income adjustment. The company appealed, but the Administrative Tribunal dismissed the appeal in November 2021, fully upholding the tax...

Greece vs “B Electro Ltd”, May 2024, Administrative Tribunal, Case No 1632/2024A Greek subsidiary of a global electronics group applied the TNMM method using ROS as its profit level indicator to document intra-group goods transactions for 2018. The tax authority rejected six of ten comparables as insufficiently comparable, conducted its own benchmark, and adjusted the taxpayer's income to the median of...

Colombia vs Carbones El Tesoro S.A., September 2021, Administrative Court, Case No. 22352Carbones El Tesoro S.A. used the TNMM to price coal sales to related party Glencore International AG. Colombian tax authorities challenged this, applying the CUP method using McCloskey quoted commodity prices and disallowing a net loss of approximately COP 30.5 billion. Colombia's Administrative Court set aside the assessment in 2021,...

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Greece vs “Clothing Distributor Ltd.”, June 2022, Administrative Tribunal, Case No 2400/2022

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