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Database of Transfer Pricing Case Laws

Greece vs “Exchange Services Ltd”, May 2024, Administrative Tribunal, Case No 1555/2024

Posted on May 20, 2024 | By Courts of Greece | No comments

Category: Disallowed Deduction, Financial Transactions, Transfer Pricing Documentation | Tag: Controlled transaction, Intra-group loan, Penalty/Fine, Related parties, Stamp duty, Transfer pricing documentation

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“Exchange Services Ltd” main activity is provision of foreign exchange services. Intra-group transactions had been carried out for FY 2018 and 2019 where it had granted loans to a related company.

An audit was carried out by the tax authority, and transfer pricing documentation for the controlled transactions was requested. However, no documentation was submitted. Fines were therefore imposed. Furthermore, various costs that had been deducted was not considered sufficiently documented and tax deductions were therefore denied.

An appeal was filed with the Administrative Tribunal.

Decision

The Tribunal upheld the assessment and rejected the appeal.

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Related Guidelines

TPG2022 Chapter V paragraph 5.43Another way for countries to encourage taxpayers to fulfil transfer pricing documentation requirements is by designing compliance incentives such as penalty protection or a shift in the burden of proof. Where the documentation meets the requirements and is timely submitted, the taxpayer could be exempted from tax penalties or subject...

TPG2022 Chapter V paragraph 5.42Care should be taken not to impose a documentation-related penalty on a taxpayer for failing to submit data to which the MNE group did not have access. However, a decision not to impose documentation-related penalties does not mean that adjustments cannot be made to income where prices are not consistent...

TPG2022 Chapter V paragraph 5.41Documentation-related penalties imposed for failure to comply with transfer pricing documentation requirements or failure to timely submit required information are usually civil (or administrative) monetary penalties. These documentation-related penalties are based on a fixed amount that may be assessed for each document missing or for each fiscal year under review,...

TPG2022 Chapter V paragraph 5.40Many countries have adopted documentation-related penalties to ensure efficient operation of transfer pricing documentation requirements. They are designed to make non-compliance more costly than compliance. Penalty regimes are governed by the laws of each individual country. Country practices with regard to transfer pricing documentation-related penalties vary widely. The existence of...

TPG2022 Chapter V paragraph 5.8This compliance objective may be supported in two important ways. First, tax administrations can require that transfer pricing documentation requirements be satisfied on a contemporaneous basis. This would mean that the documentation would be prepared at the time of the transaction, or in any event, no later than the time...

TPG2022 Chapter X paragraph 10.68It is important that the MNE group appropriately documents the reasons and selection of the credit rating used for a particular MNE when pricing intra-group loans and other controlled financial transactions....

TPG2022 Chapter V paragraph 5.62Jurisdictions endeavour to introduce as necessary domestic legislation in a timely manner. They are also encouraged to expand the coverage of their international agreements for exchange of information. The implementation of the package will be monitored on an ongoing basis. The outcomes of this monitoring will be taken into consideration...

TPG2022 Chapter V paragraph 5.61Annex IV to Chapter V of these Guidelines contains an implementation package for government-to-government exchange of Country-by-Country Reports, which includes: • Model legislation requiring the ultimate parent entity of an MNE group to file the Country-by-Country Report in its jurisdiction of residence. Jurisdictions will be able to adapt this model...

TPG2022 Chapter V paragraph 5.60Jurisdictions should require in a timely manner Country-by-Country Reporting from ultimate parent entities of MNE groups resident in their jurisdiction and referred to in Section E.2.2 and exchange this information on an automatic basis with the jurisdictions in which the MNE group operates and which fulfil the conditions listed in...

TPG2022 Chapter V paragraph 5.59Jurisdictions should use appropriately the information in the Country- by-Country Report template in accordance with paragraph 5.25. In particular, jurisdictions will commit to use the Country-by-Country Report for assessing high-level transfer pricing risk. Jurisdictions may also use the Country-by- Country Report for assessing other BEPS-related risks. Jurisdictions should not propose...

Supplemental Guidance

Ukrain vs PJSC Galnaftochim, January 2021,Supreme Administrative Court, Case No 813/3748/16A Ukrainian tax authority assessed PJSC Galnaftochim for failing to report interest payments on a loan from a non-resident related party as a controlled transaction. Lower courts sided with the taxpayer, finding the payments did not affect taxable profit and therefore fell outside controlled transaction rules. The Supreme Administrative Court...

Panama vs “Glass Corp”, February 2020, Administrative Tribunal, Case No TAT-RF-015A Panamanian company was fined for failing to file its Transfer Pricing Report (Form 930) for fiscal year 2012 within the required deadline. The tax authority imposed a penalty equal to 1% of total related-party transactions under Article 762-I of the Tax Code. Panama's Administrative Tribunal upheld the fine in...

Panama vs “Oil Export S.A”, May 2019, Administrative Tribunal, TAT-RF-057A Panamanian oil company was fined $1 million by the tax authority for failing to submit its Transfer Pricing Report (Form 930) for fiscal year 2012. The penalty was imposed under Article 762-I of the Tax Code, calculated at 1% of total related-party transaction values. Panama's Administrative Tribunal upheld the...

Argentina vs YPF S.A., May 2018, Supreme Court, Case No TF 29.205-1Argentina's tax authority adjusted YPF S.A.'s taxable income, finding that loans to controlled subsidiaries carried below-market or zero interest, and imposed a fine equal to 70% of allegedly omitted tax. The Supreme Court, in May 2018, upheld the underlying transfer pricing adjustment but set aside the penalty in a decision...

Italy vs Veneto Banca, July 2017, Regional Tax Court, Case No 2691/2017An Italian bank paid interest on a bond subscribed by an Irish group entity, with a spread two points above market. Tax authorities disallowed the excess under IRAP rules, extending Article 11(7) TUIR via Law 147/13. The bank challenged the assessment on grounds of no controlling relationship at issuance and...

Panama vs Chevron Panama Fuels Limited, October 2019, Administrative Court of Appeals, Case no 1060 (559-19)Chevron Panama Fuels Limited was fined one million balboas by Panama's tax authority for failing to file the required Transfer Pricing Report Form 930 for the 2012 tax period. After unsuccessful appeals at the administrative and tax court levels, Chevron challenged the penalty before the Administrative Court of Appeals in...

Italy vs “Lender SpA”, October 2016, Regional Tax Commission, Case No 17/10/2016 n. 308/2An Italian parent company provided interest-free loans to its Serbian subsidiaries, holding 70 and 80 percent stakes respectively. The Italian Tax Agency challenged this arrangement as a transfer pricing violation under Article 110(7) TUIR. The Regional Tax Commission upheld the first instance ruling in 2016, finding that non-interest bearing intra-group...

Germany vs “Asset management Gmbh”, April 2013, Supreme Administrative Court, Case No I R 45/11A German asset management subsidiary paid fees to a Luxembourg service company under common ownership. The company argued the parties were not related under the Foreign Tax Act and that documentation rules breached EU law. Germany's Supreme Tax Court rejected both arguments in 2013, confirming that shareholding above one quarter...

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