GE Medical Systems Italia S.p.A. is an Italian company engaged in the sale and installation of medical diagnostic equipment and the provision of technical assistance and maintenance services, primarily to hospitals and private clinics in Italy. The company, fiscally resident in France, is part of th ... Read more

A French distributor within the SNA group used a gross margin approach supported by 22 external comparables to price purchases from its Swedish parent. The French tax authority challenged the methodology, arguing that large customer discounts were improperly excluded, making the company loss-making against comparable distributors. The Nantes Court of Appeal largely upheld the administration's position, finding that profits had been transferred to the Swedish related entity contrary to the arm's length principle ... Read more

A Hungarian automotive electronics contract manufacturer reported a loss of minus 14.7% for FY 2018. The tax authority rejected the company's benchmark study, conducted its own comparable screening, and set a minimum arm's length return of 4.79%, increasing the corporate tax base by HUF 49.8 billion. The Regional Court remanded the case for re-examination in May 2025 ... Read more

A Hungarian metal parts manufacturer for the automotive industry had reported continuous losses since 2012 while its parent group remained profitable. The tax authority reclassified it as a low-risk contract manufacturer and issued an adjustment treating the losses as a hidden service to the parent. The Supreme Administrative Court ruled predominantly in favour of the taxpayer in October 2024 and remanded the case for reconsideration ... Read more

Auronext Pharma applied the CUP method to benchmark related-party purchase and sales transactions, but Indian tax authorities rejected it, substituting TNMM on the basis that the comparables were related-party transactions. The Income Tax Appellate Tribunal remanded the case in 2023, directing authorities to examine available unrelated-party data and determine whether the transactions met the arm's length standard under the CUP method ... Read more

A Czech hydraulics manufacturer was challenged by tax authorities over intercompany sales prices for valves and hydraulic aggregates, which were alleged to deviate from arm's length conditions. After the Regional Court dismissed the taxpayer's appeal, the Supreme Administrative Court reversed the decision in 2023, finding the tax authorities had not sufficiently demonstrated that the agreed prices differed from those that would apply between independent parties ... Read more

The first step of the residual profit split relies on market benchmarks of profitability. Thus, the comparability considerations that are relevant for the first step of the residual profit split are those that are relevant for the methods that are used to determine market returns for the routine contributions. The second step of the residual profit split, however, may not rely so directly on market benchmarks. Thus, the reliability of the results under this method is reduced to the extent that the allocation of profits in the second step does not rely on market benchmarks ... Read more

A Polish company selling metal containers to related parties (95% of turnover) used the cost-plus method in its transfer pricing documentation. The tax authority rejected this approach, applying TNMM and adjusting income using a 3.66% EBIT margin benchmark. The Administrative Court in 2022 confirmed TNMM as the most appropriate method but found the authority had incorrectly applied the adjustment to the company's entire activity rather than only the controlled transactions ... Read more

1 December 2021 the Polish Ministry of Finance issued Tax clarifications on transfer pricing No. 4: Transactional Net Margin Method (TNMM) Clarification on application of the TNMM is provided in these areas: A. Principles of TNMM use A.1. Scope of application of the method A.2. Tested party A.3. Determination of net profit margin A.4. Definition of the base A.5. Choice of profitability indicator A.6. Profitability comparison B. Criteria for comparability of transactions and entities C. Difficulties in applying TNMM D. Comparison with other methods E. Practical application of TNMM Click here for unofficial English translation ... Read more

A Finnish parent company had not charged concept fee royalties to its group subsidiaries. The tax authority used nine comparables and set a 4.5% routine return, adjusting the parent's taxable income accordingly. The taxpayer argued for the full range upper limit. The Supreme Administrative Court ruled in 2021 that narrowing to the interquartile range was appropriate given the number of comparables and dispersion of results ... Read more

A food distributor in the Yogo Group, selling spices and canned goods across Austria and Germany, was assessed additional taxable income following an audit using a benchmark study. The company challenged the study's compliance with OECD comparability standards. Austria's Bundesfinanzgericht annulled the corporate income tax assessments for 2010–2012 and remanded the case, requiring the tax authority to conduct a proper functional and risk analysis before reapplying the TNMM ... Read more

PT Hino Motors Manufacturing Indonesia, a subsidiary in the automotive sector, successfully defended its transfer pricing benchmark against a tax authority challenge. Following an audit for FY 2015, Indonesian authorities replaced the company's comparables, arguing economic conditions differed. The Tax Court set aside the assessment, and the Supreme Court upheld that decision in July 2021, confirming the multi-year benchmark and comparable selection met the arm's length principle ... Read more

A Finnish limited risk distributor applied the transactional net margin method with a 0.5% operating profit target, consistent with an APA covering European group companies. The tax authority challenged the approach, including a profit-level adjustment deducted in 2011 for the 2010 tax year. Finland's Supreme Administrative Court ruled mostly in favour of the taxpayer, affirming the validity of the benchmark and the group's US GAAP-based transfer pricing methodology ... Read more

A Salvadoran company appealed a tax authority assessment disallowing deductions for intra-group costs of sales. The Tax Court partially upheld the assessment but set aside the portions relying on OECD Transfer Pricing Guidelines, ruling that for the audited fiscal year El Salvador's Tax Code had not yet incorporated those guidelines or methodology, making their application legally impermissible ... Read more

ST Microelectronics Pvt. Ltd., an Indian subsidiary providing integrated circuit design and software development services to group companies, was assessed by the Transfer Pricing Officer who selected 13 comparables and computed a margin of 23.20%, resulting in a significant adjustment. The Income Tax Appellate Tribunal ruled in favour of the taxpayer in September 2020, upholding the arm's length nature of the transactions benchmarked using TNMM ... Read more

Gulbrandsen India, a chemicals manufacturer, switched from the internal CUP method to TNMM for pricing controlled transactions with affiliated enterprises. The Indian tax authorities challenged the change, arguing internal CUP was the most appropriate method. The Tax Tribunal sided with the taxpayer, and India's High Court upheld that decision in 2020, confirming TNMM as a valid most appropriate method based on the documentary evidence presented ... Read more

A Hungarian company requested an advance pricing arrangement and disputed the tax authority's use of the midpoint within the arm's length range. The tax authority argued that without comparability gaps, any point in the range is acceptable, including the midpoint. The Supreme Court of Hungary, ruling in 2019, sided with the tax authority, confirming that OECD Guidelines do not restrict adjustments to the midpoint only when comparability deficiencies exist ... Read more

The Platform for Collaboration on Tax (IMF, OECD, UN and the WBG) has published a toolkit for addressing difficulties in accessing comparables Data for Transfer Pricing Analyses. The Toolkit Includes a supplementary report on addressing the information gaps on prices of Minerals Sold in an intermediate form ... Read more

A Portuguese cork producer sold products to a related US company via an Irish group entity. The tax authority applied a transfer pricing adjustment for 2010, finding the company's net cost-plus margin of 2.91% fell outside the interquartile range of the benchmark study. The Collective Arbitration Tribunal upheld the adjustment in 2016, confirming that the interquartile range, not the full range, determines arm's length conditions ... Read more

An Italian company contested the tax authority's benchmark transactions used to assess its sales to a US subsidiary, arguing product and volume differences made comparisons invalid. Italy's Supreme Court ruled in 2015 that intra-group transactions must reflect normal value, defined as average arm's length prices for similar goods at the same marketing stage. The burden of proof rested with the taxpayer to demonstrate market-value pricing, not with the tax authority ... Read more

An Austrian subsidiary distributing household appliances recorded cumulative losses from 2001 to 2005 under intra-group pricing arrangements with European group entities. Following a tax audit, authorities recalculated transfer prices using a benchmark study showing a median EBIT margin of 1.53%, treating the resulting adjustments as hidden profit distributions. The Unabhängiger Finanzsenat upheld the adjustments in 2012, confirming that a limited risk distributor must achieve a positive cumulative operating result over a foreseeable period ... Read more

DSG Retail structured extended warranty insurance through a captive reinsurer in the Isle of Man. HMRC challenged the level of sales and profit commissions paid to DSG entities. The UK First-Tier Tax Tribunal found transfer pricing legislation applied broadly despite third-party involvement, rejected the taxpayer's proposed benchmarks due to comparability flaws, and decided in favour of the tax authority in 2009 ... Read more