Tag: Adjustment to median

§ 1.482-5(e) Example 3.

Multiple year analysis. (i) The facts are the same as in Example 2. In addition, the district director examines the taxpayer’s results for the 1997 taxable year. As in Example 2, the district director increases USSub’s income for the 1996 taxable year by $24,250. The results for the 1997 taxable year, together with the 1995 and 1996 taxable years, are as follows: 1995 1996 1997 Average Sales $560,000 $500,000 $530,000 $530,000 Cost of Good Sold 460,000 400,000 430,000 430,000 Operating Expenses 110,000 110,000 110,000 110,000 Operating Profit (10,000) (10,000) (10,000) (10,000) (ii) The interquartile range of comparable operating profits, based on average results from the uncontrolled comparables and average sales for USSub for the years 1995 through 1997, ranges from $15,500 to $30,000. In determining whether an allocation for the 1997 taxable year may be made, the district director compares USSub’s average reported operating profit for the years 1995 through 1997 to the interquartile range of average comparable operating profits over this period. USSub’s ... Read more
Greece vs "Clothing Distributor Ltd.", June 2022, Tax Court, Case No 2400/2022

Greece vs “Clothing Distributor Ltd.”, June 2022, Tax Court, Case No 2400/2022

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.” Judgement of the Court The court 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” Click here for English translation Click here for other translation gr-ded-2022-2400_en_ath-2400_2022 ... Read more
Greece vs "Marine Fuel Ltd", January 2022, Dispute Settlement Board, Case No 36/2022

Greece vs “Marine Fuel Ltd”, January 2022, Dispute Settlement Board, Case No 36/2022

“Marine Fuel Ltd” was audited for FY 2015 and an assessment was issued by the tax authorities, where the taxable income had been increased due to a transfer pricing adjustment. The tax authorities had dismissed the CUP method chosen by the group and instead applied the transactional net margin method (TNMM). Not satisfied with the adjustment, a complaint was filed by “Marine Fuel Ltd” with the Dispute Settlement Board. Judgement of the Board The Board dismissed the complaint of “Marine Fuel Ltd” and upheld the assessment issued by the tax authorities. Excerpts “As some separate transactions carried out between associated enterprises may need to be assessed as a single transaction in order to determine whether the arm’s length principle is respected, other transactions between these enterprises that were invoiced as a package may need to be assessed separately. A group may combine a package of transactions and set a price for a set of transactions, such as intangible assets for ... Read more
Romania vs "A. S.R.L.", March 2021, Supreme Administrative Court, Case No 1427/2021

Romania vs “A. S.R.L.”, March 2021, Supreme Administrative Court, Case No 1427/2021

The tax authorities had issued an assessment, where the income of A SRL had been adjusted by reference to Romanian transfer pricing provisions. An appeal was filed by A SRL claiming annulment of the assessment. In the Bucharest Court of Appeal, the assessment was set aside in part. An appeal was then filed by the tax authorities with the Supreme Court. Judgement of Supreme Administrative Court The Court found that the appeals were well founded and set aside, in part, the judgment under appeal. Excerpts “The choice of methods for determining transfer prices differs from one company to another, the appropriateness of applying any of the methods being influenced by the characteristics of the transactions analysed. Thus, the selection of a particular method depends on the existence of comparable transactions carried out between independent persons (so-called “uncontrolled transactions”) as well as other comparability factors as follows: the characteristics of the goods or services traded (e.g. the physical characteristics of the ... Read more