TYRAS S.A. is active in the industrial production, import, export and marketing of dairy products, cheese etc. During the financial year in question, TYRAS S.A. had carried out transactions with subsidiaries belonging to the same group.
Following an audit, the tax authority concluded that, TYRAS S.A. had not complied with the arm’s length principle and an assessment of additional taxable income was issued.
In its appeal TYRAS S.A. challenged, inter alia, the sufficiency of the evidence supporting the tax authority’s finding that the arm’s length principles had not been complied with, arguing in particular that the size of the discrepancy was negligible (0.17%), compared with ‘the total volume of intra-group transactions. TYRAS S.A. further argued that it had applied the arm’s length principle in line with the internationally accepted OECD guidelines ((paragraph (1)(b)(ii) and paragraph (2)(b)(ii)(iii)) 3.13 and 3.14).
The Administrative Court decided mostly in favour of TYRAS S.A. and an appeal was then filed by the tax authorities with the Supreme Administrative Court.
Judgment of the Court
The Supreme Administrative Court dismissed the appeal and upheld the decision of the Administrative Court.
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