A Swiss bank had a subsidiary in Guernsey that administered a number of funds and received a management fee of 1.5% of the net value of the assets under management and a performance fee of 10–20% of the funds’ performance. The activities of the Guernsey company were delegated to the Swiss parent and third parties. Both the third parties and the Swiss parent received an management fee of 0.75%, but only the third parties also received a performance fee.
The tax administration claimed that 70% of the performance fees and a remuneration for other activities should have been paid to the Swiss parent.
Judgement of the Supreme Court
The Court found that the agreed conditions with third-party service providers were at arm’s length, and should also have been applied in relation to the Swiss parent company. Hence, the court dismissed the appeal of