Universal Pictures International Spain SL is a distributor of films on the Spanish Market. It distributes films both from related parties (Universal Pictures) and from unrelated parties.
Following an audit, the Spanish tax authorities issued an assessment where the remuneration received for distribution of films from related parties had been compared to the remuneration received from distribution of films from unrelated parties and where the pricing of the controlled transactions had been adjusted accordingly .
Not satisfied with the assessment of additional income a complaint was filed by Universal Pictures International Spain SL.
Judgement of the Court
The Court predominantly held in favor of Universal Pictures International Spain SL.
The distribution activities performed in regards of films from related parties were limited risk whereas the activities performed in regards of distribution of films from unrelated parties were fully fledged. Hence the pricing of the controlled and uncontrolled transactions was not comparable.
However, the comparables in the benchmark analysis on which Universal Pictures International Spain SL had based the pricing of controlled transactions was not all considered sufficiently comparable by the court and on that basis the case was referred back for reconsideration.