Facebook entered a cost-sharing arrangement in 2009, transferring platform and marketing intangibles to its Irish affiliate and valuing them at $6.3 billion. The IRS applied the income method and assessed a $19.9 billion value. The US Tax Court ruled mostly in favour of the IRS, upholding the income method and rejecting challenges to the 2009 cost-sharing regulations, but materially reduced the IRS valuation amount ... Read more

A Peruvian company purchased crude soybean oil from a related party and applied the CUP method to price the controlled transactions. The tax authority rejected this approach, substituting the TNMM and issuing an additional taxable profits assessment. The Peru Tax Court set aside the assessment in March 2023, upholding the taxpayer's choice of the CUP method as the most appropriate transfer pricing method ... Read more

A Danish subsidiary paid interest and dividends to a parent company that passed funds through to entities in Bermuda and the Cayman Islands. The Danish tax authority denied withholding tax exemptions under the Parent-Subsidiary Directive and applicable tax treaties. The Court of Appeal upheld the authority's position in 2023, finding the intermediate companies were conduits and that no beneficial owner resident in a treaty country had been established ... Read more

A Luxembourg SARL challenged tax authority assessments covering three intra-group transactions: a share buyback reclassified as a hidden distribution of profits to a Cayman Islands shareholder, disallowed service cost deductions, and disallowed interest deductions. The Administrative Tribunal ruled in the taxpayer's favour on interest and service deductions but upheld the hidden distribution finding on excess share redemption payments, remanding the matter for reassessment of share value and withholding tax ... Read more

Two Danish companies, NetApp Denmark ApS and TDC A/S, distributed dividends totalling over DKK 1.6 billion to intermediate parent companies in Cyprus and Luxembourg, which passed funds on to entities in Bermuda and the Cayman Islands. The Danish tax authority assessed 28% withholding tax, arguing the intermediaries were conduit companies and not beneficial owners. Denmark's Supreme Court upheld the tax authority's position in 2023, denying EU Parent-Subsidiary Directive protection ... Read more

A Luxembourg company received funding via a profit participating loan from a related Cayman Islands entity and claimed notional interest deductions on a capital gain from securities. The Luxembourg tax authority disregarded the financing classification and denied the deductions, finding the structure was adopted solely for tax purposes. The Administrative Tribunal upheld the tax authority's assessment in full in September 2022 ... Read more

A Dutch BV made dividend distributions to a Luxembourg company without withholding Dutch dividend tax, relying on an exemption. The tax authority challenged the arrangement, arguing LuxCo was a conduit with no real economic activity, passing 99.84% of dividends to a Cayman Islands partnership. The Netherlands District Court in 2022 found abuse of EU law, upholding the 15% withholding tax, though default fines were annulled as the taxpayer's position was arguable ... Read more

A private equity fund used Luxembourg preferred equity certificates to finance the acquisition of a Dutch target group, creating an international deduction/no-inclusion mismatch. The Dutch tax authority challenged the interest deductions under non-business loan case law and fraus legis. The Advocate General at the Netherlands Supreme Court reviewed the Court of Appeal's reasoning in 2020 and recommended the case be remanded for re-examination ... Read more

A wholesale cosmetics company in El Salvador was assessed by tax authorities over interest rates on loans granted to related parties domiciled in the Cayman Islands and Luxembourg. The company appealed, challenging the application of OECD Transfer Pricing Guidelines as non-binding. The Tax Court partially upheld the assessment in 2020, confirming the authority's power to determine market prices while ruling the OECD Guidelines hold no binding legal status in El Salvador ... Read more

Redington India transferred its shareholding in a UAE subsidiary to a Cayman Islands step-down subsidiary without consideration, claiming the transfer was a gift exempt from capital gains tax. The Indian tax authorities disputed this, applying transfer pricing rules and the CUP method. The Madras High Court ruled mostly in favour of the taxpayer in December 2020, accepting the gift characterisation and the legitimacy of the tax planning structure ... Read more

BlueCrest Capital Management structured partnership profit allocations through mixed member partnerships involving Cayman Islands entities. HMRC challenged the arrangements under anti-avoidance legislation, including occupational income and unallowable purpose loan rules. The UK First-Tier Tribunal ruled in favour of HMRC in 2020, finding that although the arrangements had a commercial purpose, a main object was avoiding income tax, satisfying the test for the occupational income provisions ... Read more

Following its acquisition by Broadcom Corporation in 2009, Broadcom Semiconductors Ltd transferred intellectual property and entered into service and licence agreements with group affiliates. The Israeli tax authority argued that functions, assets, and risks had been stripped from Israel, issuing a USD 29 million assessment. The Lod District Court ruled in favour of the taxpayer in 2019, finding that Broadcom Israel continued as an active licensor and service provider after the restructuring ... Read more

Following Broadcom's 2012 acquisition of Broadlight, the Israeli subsidiary sold its IP to a group company for $59.5m and converted to a cost-plus service provider. The Israeli tax authorities recharacterised the transaction, assessing the full value transferred at $168.5m. Broadcom challenged the burden of proof, but both the District Court and the Supreme Court upheld the tax authority's assessment in 2019 ... Read more

A Luxembourg company holding a 30% stake in an Austrian airport operator claimed a refund of withheld dividend tax. Austrian tax authorities denied the refund, treating the structure as abusive due to links to a Cayman Islands fund. The Federal Fiscal Court upheld the denial, but Austria's Administrative High Court reversed this in 2019, finding the Luxembourg parent had genuine economic substance and a valid business reason existed ... Read more

A New Zealand citizen restructured a $291 million shareholding into debt owed to Cayman Islands conduit companies he controlled, enabling payment of an Approved Issuer Levy of $8 million rather than $59.5 million in non-resident withholding tax. The New Zealand High Court in 2019 found in favour of the tax authority, ruling the arrangement constituted tax avoidance and that the general anti-avoidance provisions applied ... Read more

SIH Partners LLLP, an affiliate of US commodities trader Susquehanna International Group, contested a $377 million tax assessment arising from a $1.5 billion Merrill Lynch loan guaranteed by its Irish and Cayman Islands subsidiaries. The IRS argued the guarantees constituted investment in US property under IRC Section 956, triggering a deemed dividend inclusion. The US Court of Appeal for the Third Circuit upheld the Tax Court's ruling in favour of the tax authority in 2019 ... Read more

Vodafone India Services held a call option to acquire shares in SMMS Investment at a low price but instead terminated the option, paying Rs 21.25 crore. The Indian tax authority argued the termination was a deemed international transaction under section 92B(2) and that substantial consideration should have been received. The Income Tax Appellate Tribunal ruled in favour of the tax authority in 2018, valuing the consideration based on subsequent market share prices ... Read more

Oxfam’s list of Tax Havens, in order of significance are: (1) Bermuda (2) the Cayman Islands (3) the Netherlands (4) Switzerland (5) Singapore (6) Ireland (7) Luxembourg (8) Curaçao (9) Hong Kong (10) Cyprus (11) Bahamas (12) Jersey (13) Barbados, (14) Mauritius and (15) the British Virgin Islands. Most notably is The Netherlands placement as no. 3 on the list. Oxfam researchers compiled the list by assessing the extent to which countries employ the most damaging tax policies, such as zero corporate tax rates, the provision of unfair and unproductive tax incentives, and a lack of cooperation with international processes against tax avoidance (including measures to increase financial transparency). Many of the countries on the list have been implicated in tax scandals. For example Ireland hit the headlines over a tax deal with Apple that enabled the global tech giant to pay a 0.005 percent corporate tax rate in the country. And the British Virgin Islands is home to more ... Read more

A Japanese group's Cayman Islands subsidiary was assessed under Japan's CFC anti-tax haven rules, which attribute low-taxed foreign subsidiary income to the parent when the subsidiary holds shares or IP rights. The taxpayer argued the substance exemption applied, but the Tokyo District Court upheld the tax authority's assessment in 2015, finding the subsidiary lacked sufficient economic substance to escape the CFC charge ... Read more

Coca-Cola Embonor S.A. deducted interest payments on a loan to a related party in the Cayman Islands. Chilean tax authorities disallowed the deduction, finding the payments failed the necessary expense test under Article 31 of the Income Tax Law. The Tax Court and Court of Appeal both ruled against the taxpayer. In July 2013, Chile's Supreme Court upheld those decisions, finding the taxpayer could not prove a direct link between the interest expense and Chilean taxable income ... Read more

A Swiss group routed financing income through a Cayman Islands permanent establishment to avoid Swiss tax, while domestic subsidiaries deducted interest payments in full. The Swiss Federal Supreme Court, ruling in October 2012, found the Cayman entity had only four employees and insufficient substance relative to its balance sheet, denying the income allocation to the Cayman Islands and upholding the tax authority's position ... Read more

A Luxembourg investment company sold shares in a Canadian mining firm, realising a capital gain of over $425 million. Canada's tax authority applied the General Anti-Avoidance Rule to deny treaty protection under the Canada-Luxembourg tax convention. The Tax Court and, on appeal, the Federal Court of Canada both ruled in favour of the taxpayer in 2007, finding no abuse or misuse of the treaty's capital gains exemption provision ... Read more

A Luxembourg-based company challenged a Canadian tax assessment that denied treaty exemption on a $425 million capital gain from selling shares in Diamond Fields Resources. The tax authority applied general anti-avoidance rules, arguing the transactions formed an abusive series. The Tax Court of Canada ruled in the taxpayer's favour in 2006, finding the sale was not part of an avoidance transaction series and setting aside the assessment ... Read more