A Colombian manufacturer within the GKN group made a comparability adjustment in its transfer pricing study to account for the first year of IFRS implementation in 2015. The tax authority rejected the adjustment, determined profitability fell outside the interquartile range, and adjusted results to the median, disallowing deductions. The Supreme Administrative Court ruled in favour of the taxpayer in 2025, accepting the IFRS transition adjustment as valid ... Read more

On 24 November 2025, HMRC released new operational guidance on the use of benchmarks, the narrowing of the arm’s-length range, and adjustments to the median. If the HMRC determines that a taxpayer’s transfer pricing results in outcomes that fall outside the arm’s-length range, it will adjust the pricing, and according to the new guidance, the median is likely to be the most appropriate basis for making these adjustments ... Read more

A Greek motor vehicle wholesale company was assessed additional income tax after authorities excluded comparable companies and adjusted results to the arm's length median, converting declared losses into taxable profits. The Administrative Court of Appeal upheld the adjustments, but Greece's Supreme Administrative Court reversed the decision in 2025, finding the lower court had incorrectly relied on a ministerial decision not applicable to the years under review ... Read more

A Greek motor vehicle wholesale company was assessed additional income tax after authorities excluded comparable companies and adjusted results to the arm's length median, converting declared losses into taxable profits. The Administrative Court of Appeal upheld the adjustments, but Greece's Supreme Administrative Court reversed the decision in 2025, finding the lower court had incorrectly relied on a ministerial decision not applicable to the years under review ... Read more

A Spanish subsidiary of a multinational consumer goods group was audited for 2015–17 over contract manufacturing services, intra-group loans, and cash pooling arrangements. The tax authority rejected part of the taxpayer's comparable set and adjusted margins to the median, also applying group credit ratings and substituting Euribor with Eonia. Spain's TEAC largely upheld the authority's position in its October 2025 ruling ... Read more

FCA Greece S.A., a car importer, reported a tax loss for 2011 using TNMM-based transfer pricing documentation. Greek tax authorities rejected comparables and adjusted results to the interquartile range median, issuing a €6.5 million correction. The Supreme Administrative Court upheld the lower court's annulment, confirming that adjustment to the median without specific justification is unlawful where results already fall within the arm's length range ... Read more

A Greek motorcycle wholesaler challenged a tax authority adjustment that moved its tested operating margin to the median of a recalculated interquartile range for 2008. The Supreme Administrative Court ruled in favour of the taxpayer, finding that the 2008 legal framework created only a rebuttable presumption and that newly enacted transfer pricing rules could not be applied retroactively as a binding methodology for that year ... Read more

A Dutch company transferred receivables to a low-tax affiliated entity under a factoring arrangement, reducing its Dutch taxable base. The Amsterdam Court of Appeal accepted the arm's length defence, but the Dutch Supreme Court annulled that decision in 2025, finding insufficient reasoning on comparability, risk allocation, and business substance. The case was remanded to a different Court of Appeal for reconsideration ... Read more

A Dutch company transferred receivables to a low-tax affiliated entity under a factoring arrangement, reducing its Dutch taxable base. The Amsterdam Court of Appeal accepted the arm's length defence, but the Dutch Supreme Court annulled that decision in 2025, finding insufficient reasoning on comparability, risk allocation, and business substance. The case was remanded to a different Court of Appeal for reconsideration ... Read more

A Belgian company financed a €16 million share acquisition partly via a 5% fixed-rate loan from its British parent. The tax authority applied the internal CUP method, using a concurrent ING bank loan as a comparable, and adjusted the arm's length rate to 3.32%. The Court of First Instance upheld the assessment in 2025, rejecting the taxpayer's external CUP study and confirming a 10% penalty for incorrect filing ... Read more

A Belgian company financed a €16 million share acquisition partly via a 5% fixed-rate loan from its British parent. The tax authority applied the internal CUP method, using a concurrent ING bank loan as a comparable, and adjusted the arm's length rate to 3.32%. The Court of First Instance upheld the assessment in 2025, rejecting the taxpayer's external CUP study and confirming a 10% penalty for incorrect filing ... Read more

A Colombian company had interest deductions on loans from a British Virgin Islands related party disallowed after tax authorities found its transfer pricing documentation deficient. The taxpayer relied solely on US corporate bond comparables, which authorities rejected as insufficiently similar. Colombia's Supreme Administrative Court upheld the adjustments in 2025, finding the taxpayer failed to disprove the authority's findings or demonstrate flaws in the comparability analysis ... Read more

A Norwegian oil and gas company granted a loan to a foreign group entity and applied an interest rate supported by benchmarking. The tax authority rejected the selected comparables as insufficiently comparable and adjusted 2016 income upward. After the court of first instance ruled for the taxpayer, the Court of Appeal reversed, finding methodological weaknesses in the benchmarking and confirming the adjustment as the taxpayer had not met its burden of proof ... Read more

Cipla Kenya Limited, a pharmaceutical distributor, reported an operating margin within the interquartile range under TNMM. The Kenya Revenue Authority adjusted the result to the median, citing comparability defects in the benchmarking study. The Tax Appeal Tribunal sided with the taxpayer in 2025, finding that where defects are explicitly identified, the authority must quantify adjustments rather than default to the median ... Read more

A Colombian emerald producer used the CUP method to justify related-party sales prices, relying on independent appraiser valuations as comparables. The tax authority rejected this approach and applied TNMM using a cost-based profit level indicator, adjusting income to the benchmarking median. The Council of State upheld the assessment in April 2025, confirming that appraiser valuations do not constitute comparable uncontrolled prices under the CUP method ... Read more

A Romanian company challenged additional corporate income tax following transfer pricing adjustments for FY 2012–2017. The Bucharest Court of Appeal had largely upheld the tax authority's position for FY 2013–2017. Romania's Supreme Administrative Court quashed that decision in 2025, finding the lower court had reproduced the tax authority's reasoning without independent analysis and failed to justify its rejection of the court-appointed expert's findings, remanding the case for fresh review ... Read more

A Romanian company challenged additional corporate income tax following transfer pricing adjustments for FY 2012–2017. The Bucharest Court of Appeal had largely upheld the tax authority's position for FY 2013–2017. Romania's Supreme Administrative Court quashed that decision in 2025, finding the lower court had reproduced the tax authority's reasoning without independent analysis and failed to justify its rejection of the court-appointed expert's findings, remanding the case for fresh review ... Read more

Sofia Med AD challenged a Bulgarian tax authority assessment covering related-party purchases of intermediary services, copper cathodes with deferred payment interest, and sales of finished products for FY 2014. The Administrative Court largely upheld the assessment, but Bulgaria's Supreme Administrative Court remanded the case in January 2025, finding the lower court had not adequately assessed comparability criteria or provided sufficient reasoning for rejecting the company's transfer pricing documentation ... Read more

Colombia's Supreme Administrative Court ruled mostly in favour of ABB Ltda in a dispute over the tax authority's rejection of five comparables from a TNMM benchmark study. The court reinstated four of the five excluded companies, finding insufficient grounds for their removal, and only upheld the exclusion of Dulhunty Power Ltd. due to significant intangibles. Recalculating the interquartile range, the court confirmed that the taxpayer's transactions fell within the arm's length range and restored the disallowed expenses ... Read more

IKEA Industry Slovakia, a contract furniture manufacturer within the Swedwood group, was assessed additional corporate income tax after Slovak tax authorities rejected its CUP method and applied TNMM, finding its reported losses fell outside the arm's length range. The Slovak Administrative Court ruled in favour of the taxpayer in September 2024, finding flaws in the benchmarking comparability analysis conducted by the tax authorities ... Read more

Colombia's Supreme Administrative Court ruled in favour of the tax authority in a 2024 dispute over C.I. Banacol's FY2013 transfer pricing for related-party transactions. DIAN rejected the taxpayer's segmented approach and applied TNMM on an aggregated basis, arguing the transactions served a single commercial purpose. The court agreed, confirming that the interrelated fruit marketing transactions should be analysed collectively and that the selected comparables and interquartile range were appropriate ... Read more

A Malaysian offshore vessel chartering company paid a related Labuan ship-owner a 35% cost-plus mark-up for charter hire and crew management services. The tax authority rejected the comparables and method selected, issuing additional assessments under Section 140A using the transactional net margin method. The Malaysia High Court in 2024 dismissed the taxpayer's judicial review application, finding the assessments were not unlawful, irrational, or unreasonable ... Read more

Yazaki Bulgaria's actual net cost plus margins fell outside the arm's length interquartile range for 2014–2016, but the company applied cost basis adjustments to bring them within range. The tax authorities rejected those adjustments and issued an income assessment. Bulgaria's Supreme Administrative Court overturned the lower court's annulment of the assessment in July 2024, ruling in favour of the tax authorities and upholding the original transfer pricing correction ... Read more

An Italian call centre subsidiary received a 5% cost mark-up from its Dutch parent. Tax authorities removed loss-making companies from the benchmark study, raising the median to 7.42% and issuing an assessment. The Supreme Court overturned lower tribunal rulings in 2024, finding that loss-making comparables can only be excluded when their losses result from exceptional circumstances not comparable to the tested party ... Read more

Honda Motor de Argentina S.A., an importer and distributor of vehicles and motorcycles, challenged an ARS 9.7 million transfer pricing adjustment for fiscal year 2009. Argentina's tax authority rejected a Canadian wholesale distributor as a TNMM comparable due to a negative operating margin, product differences, and a goodwill impairment. The National Tax Court sided with Honda, finding the comparable valid and the authority's grounds for exclusion unsupported ... Read more

A Korean hygiene product manufacturer sold goods to forty-five related parties at cost plus 8%, dispatched employees abroad, and transferred know-how royalty-free. The tax authority assessed additional profits for non-arm's length pricing and unpaid royalties and service fees. The Korea Tax Tribunal ruled mostly in favour of the tax authority in May 2024, rejecting the taxpayer's reliance on internal comparables and idle-capacity rationale under the cost-plus method ... Read more

A Colombian auto manufacturer was assessed additional taxable income for FY2011 after the tax authority challenged its use of prior-year comparables and comparability adjustments for intra-group inventory purchases. The Administrative Court ruled for the taxpayer, and the Supreme Administrative Court upheld that decision in 2024, confirming that the benchmark study, transfer pricing method, and comparability adjustments applied were reasonable and acceptable ... Read more

UFI Filters SpA paid related Chinese companies for filter supplies using cost-plus mark-ups. Italian tax authorities challenged the arm's length nature of those mark-ups using a benchmark of six comparables. After mixed lower court rulings, Italy's Supreme Court dismissed the tax authority's appeal in April 2024, upholding the Regional Tax Commission's finding that the comparable companies were insufficiently comparable under the cost-plus method ... Read more

A Romanian manufacturer of lifting and handling equipment paid royalties to its French parent using a TNMM-based arm's length analysis. The tax authority rejected four CUP comparables submitted by the taxpayer due to industry and royalty-base differences. Romania's Supreme Administrative Court sided with the tax authority, finding the comparables did not meet comparability criteria, and remanded the case for reexamination in 2024 ... Read more

Israel's tax authority assessed eBay Marketplace Israel Ltd. as a limited risk distributor using TNMM with operating margin as the profit level indicator. The company appealed, challenging the comparability analysis. The District Court remanded the case in April 2024, directing the tax authority to reissue assessments with adjustments for profitability cycles, double-counted transactions, double taxation risks, platform value contributions, and revised comparable company selection ... Read more

PT VVF Indonesia, an oleochemical manufacturer, disputed the tax authority's rejection of its net cost plus benchmark and replacement comparables for related-party sales to VVF India in 2016. The authority tested profitability at company level and substituted seven new comparables, arguing comparability defects were adequately addressed. Indonesia's Tax Court partly granted the taxpayer's appeal in February 2024 ... Read more

A Malaysian edible oil producer challenged transfer pricing assessments issued by the tax authority for FY2011 and FY2014, which adjusted results to the median and interquartile range respectively. The Special Commissioner of Income Tax allowed the appeal in 2023, holding that no adjustment under Section 140A is permissible where the taxpayer's result falls within the arm's length range and no comparability defects justify narrowing the range ... Read more

A Malaysian subsidiary of Thomson Reuters acted as a local distributor of information and dealing services, applying TNMM with a 2% target operating margin. The tax authority rejected five comparables, added three local ones, and included SG&A costs in the margin calculation. The Special Commissioner of Income Tax upheld the authority's assessment in 2023, dismissing the taxpayer's reliance on pan-Asian comparables and excluding extraordinary costs ... Read more

A Colombian coal company made comparability adjustments to account for exchange rate risk assumed by the tested party. The tax authority challenged the reliability of these adjustments. Colombia's Council of State upheld the adjustments in 2023, finding that exchange rate variations are a valid comparability factor affecting price or profit margin, and ruled in favour of Drummond LTDA ... Read more

A Czech automotive subcontractor was assessed additional corporate income tax after the tax authority argued its intra-group wage labour prices were below arm's length. The company challenged the comparability of the tax authority's analysis, arguing subcontractor and final supplier activities were incomparable. The Czech Supreme Administrative Court sided with the taxpayer in June 2023, finding the CUP method was applied with material comparability defects ... Read more

A Spanish manufacturer of cookers and heaters reported negative profit margins on intra-group transactions in 2010 and 2011, attributing losses to the financial crisis. The tax authority adjusted profits to the median using the TNMM. The Audiencia Nacional largely upheld the assessment in 2023 but reduced the adjustment to the lower quartile, finding that a median adjustment required proven comparability defects that the authorities had not sufficiently established ... Read more

The Peruvian tax authority SUNAT rejected three loss-making comparables used by a taxpayer in its benchmark study and issued a transfer pricing adjustment. The Tax Court overturned the assessment in 2023, finding SUNAT had not justified the exclusions. Citing OECD Guidelines paragraphs 3.64 and 3.65, the court held that loss-making status alone is insufficient grounds for rejection without evidence of exceptional, non-comparable circumstances ... Read more

A French manufacturer sold products abroad through both subsidiaries and independent agents. The tax authority applied an internal CUP, using commissions paid to independent agents as a benchmark for subsidiary remuneration. SAS Sames Kremlin argued that subsidiaries performed greater functions and operated in different markets. The Paris Administrative Court of Appeal dismissed the appeal in 2023, upholding the transfer pricing adjustment and finding the taxpayer had not discharged its burden of proof ... Read more

A Spanish branch performing IT distribution and marketing activities was assessed by tax authorities who adjusted its income to the median of a TNMM benchmark range and disallowed intra-group service fee deductions. The branch appealed, and Spain's TEAC partially upheld the appeal in January 2023, finding deficiencies in the tax authority's comparability analysis and burden of proof regarding the interquartile range adjustment ... Read more

A Panamanian tech distributor received a USD 1.4 million transfer pricing adjustment for FY2013 after tax authorities found inconsistencies in reported transactions, improper inclusion of other income in the TNMM operating margin, and flawed comparability adjustments. The Panama Tax Tribunal upheld the assessment in January 2023, confirming that the rejected comparables and disallowed adjustments placed the company's profit margin outside the interquartile range, warranting adjustment to the median ... Read more

A Spanish transport company priced controlled transactions using gross margin comparisons, but tax authorities rejected this method due to comparability issues and applied TNMM, adjusting profits to the median. The Audiencia Nacional largely upheld the tax authority's approach in 2022, but ruled that adjustment to the median required established comparability defects. Since none were proven, the adjustment was reduced to the lower quartile ... Read more

Selection of comparables. (i) To evaluate the arm’s length result of a controlled transaction between USSub, the United States taxpayer under review, and FP, its foreign parent, the district director considers applying the resale price method. The district director identifies ten potential uncontrolled transactions. The distributors in all ten uncontrolled transactions purchase and resell similar products and perform similar functions to those of USSub. (ii) Data with respect to three of the uncontrolled transactions is very limited, and although some material differences can be identified and adjusted for, the level of comparability of these three uncontrolled comparables is significantly lower than that of the other seven. Further, of those seven, adjustments for the identified material differences can be reliably made for only four of the uncontrolled transactions. Therefore, pursuant to § 1.482-1(e)(2)(ii) only these four uncontrolled comparables may be used to establish an arm’s length range ... Read more

For purposes of this section, the interquartile range is the range from the 25th to the 75th percentile of the results derived from the uncontrolled comparables. For this purpose, the 25th percentile is the lowest result derived from an uncontrolled comparable such that at least 25 percent of the results are at or below the value of that result. However, if exactly 25 percent of the results are at or below a result, then the 25th percentile is equal to the average of that result and the next higher result derived from the uncontrolled comparables. The 75th percentile is determined analogously ... Read more

If there are no uncontrolled comparables described in paragraph (e)(2)(iii)(A) of this section, the arm’s length range is derived from the results of all the uncontrolled comparables, selected pursuant to paragraph (e)(2)(ii) of this section, that achieve a similar level of comparability and reliability. In such cases the reliability of the analysis must be increased, where it is possible to do so, by adjusting the range through application of a valid statistical method to the results of all of the uncontrolled comparables so selected. The reliability of the analysis is increased when statistical methods are used to establish a range of results in which the limits of the range will be determined such that there is a 75 percent probability of a result falling above the lower end of the range and a 75 percent probability of a result falling below the upper end of the range. The interquartile range ordinarily provides an acceptable measure of this range; however a different statistical method may ... Read more

The arm’s length range will consist of the results of all of the uncontrolled comparables that meet the following conditions: the information on the controlled transaction and the uncontrolled comparables is sufficiently complete that it is likely that all material differences have been identified, each such difference has a definite and reasonably ascertainable effect on price or profit, and an adjustment is made to eliminate the effect of each such difference ... Read more

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Uncontrolled comparables must be selected based upon the comparability criteria relevant to the method applied and must be sufficiently similar to the controlled transaction that they provide a reliable measure of an arm’s length result. If material differences exist between the controlled and uncontrolled transactions, adjustments must be made to the results of the uncontrolled transaction if the effect of such differences on price or profits can be ascertained with sufficient accuracy to improve the reliability of the results. See § 1.482-1(d)(2) (Standard of comparability). The arm’s length range will be derived only from those uncontrolled comparables that have, or through adjustments can be brought to, a similar level of comparability and reliability, and uncontrolled comparables that have a significantly lower level of comparability and reliability will not be used in establishing the arm’s length range ... Read more

USP, a United States manufacturer of farm machinery, sells its products to FSub, its wholly-owned distributor in Country Y. USP, operating at nearly full capacity, sells 95% of its inventory to FSub. To make use of its excess capacity, and also to establish a comparable uncontrolled price for its transfer price to FSub, USP increases its production to full capacity. USP sells its excess inventory to Compco, an unrelated foreign distributor in Country X. Country X has approximately the same economic conditions as that of Country Y. Because one of the principal purposes of selling to Compco was to establish an arm’s length price for its controlled transactions with FSub, USP’s sale to Compco cannot be used as an uncontrolled comparable to determine USP’s arm’s length result from its controlled transaction ... Read more

Not in the ordinary course of business. USP, a United States manufacturer of computer software, sells its products to FSub, its foreign distributor in country X. Compco, a United States competitor of USP, also sells its products in X through unrelated distributors. However, in the year under review, Compco is forced into bankruptcy, and Compco liquidates its inventory by selling all of its products to unrelated distributors in X for a liquidation price. Because the sale of its entire inventory was not a sale in the ordinary course of business, Compco’s sale cannot be used as an uncontrolled comparable to determine USP’s arm’s length result from its controlled transaction ... Read more

The following examples illustrate the principle of this paragraph (d)(4)(iii) ... Read more