Tag: Benchmark

EU JTPF, March 2017, Report on the Use of Comparables in the EU

EU JTPF, March 2017, Report on the Use of Comparables in the EU

In March 2017 the JTPF agreed the Report on the Use of Comparables in the EU. The report establishes best practices and pragmatic solutions by issuing various recommendations for both taxpayers and tax administrations in the EU and aims at increasing in practice the objectivity and transparency of comparable searches for transfer pricing. JTPF-comparables-October-2016 ... Continue to full case
Italy vs. ILPEA SPA, July 2015, Supreme Court 15298

Italy vs. ILPEA SPA, July 2015, Supreme Court 15298

This case is about an Italian company, ILPEA S.p.A, transactions with it’s US subsidiary. The company stated that there were substantial difference between the products sold to its subsidiary in the United States and the benchmark transactions considered by the Tax Administration: quality of the products, volumes of sales, terms of sale. These differences affected the pricing, so that these transactions could not be compared with other transactions with independent parties. The Court found that the transactions carried out with controlled companies must be evaluated according to the “normal value”, defined as the average price charged for similar goods or services with independent parties and at the same marketing stage. Therefore, “normal value” is considered to be the ordinary prices of goods and services charged at arm’s length conditions, referring, as much as possible, to “pricelists” and “rates”. The Court also stated that the tax administration does not have to prove existence of tax evation, but only the existence of ... Continue to full case
UK vs. DSG Retail (Dixon case), Tax Tribunal, Case No. UKFT 31

UK vs. DSG Retail (Dixon case), Tax Tribunal, Case No. UKFT 31

This case concerns the sale of extended warranties to third-party customers of Dixons, a large retail chain in the UK selling white goods and home electrical products. The DSG group captive (re)insurer in the Isle of Man (DISL) insured these extended warranties for DSG’s UK customers. Until 1997 this was structured via a third-party insurer (Cornhill) that reinsured 95% on to DISL. From 1997 onwards the warranties were offered as service contracts that were 100% insured by DISL. The dispute concerned the level of sales commissions and profit commissions received by DSG. The Tax Tribunal rejected the taxpayer’s contentions that the transfer pricing legislation did not apply to the particular series of transactions (under ICTA 88 Section 770 and Schedule 28AA) – essentially the phrases ‘facility’ (Section 770) and ‘provision’ (Schedule 28AA) were interpreted broadly so that there was something to price between DSG and DISL, despite the insertion of a third party and the absence of a recognised transaction ... Continue to full case