In this case a Dutch subsidiary of a Japanese car group incurred losses related to import and sales of a specific car model. However in total the car importer remained profitable. The tax authorities claimed that the purchase price of the specific car model had been too high, and on that basis an assessment of additional income was issued. Judgement of the Supreme Court The court set aside the assessment and decided in favour of the car importer. According to the court the tax authorities did not make it sufficiently plausible that the price for the car model had not at arm’s length – taking into consideration the overall functions and profitability of the car importer. Excerpt “The following must be stated first. The at arm’s length principle, as included in Article 10(b) of the Treaty with Japan (Treaty Series 1970, 67, as amended by Treaty Series 1992, 68) empowers the Netherlands to take into account advantages that would have ... Read more