Tag: Comparables

Finland vs Corp, Sep. 2017, HFD No. 2017-146

Finland vs Corp, Sep. 2017, HFD No. 2017-146

/ Comparables, Finland, Services and Fees
Ruling by the Finnish Supreme Administrative Court on a service provider’s obligation to add a mark-up on its costs when calculating an arm’s length service charge. A Plc had provided services to it’s subsidiaryes related to supply chains, marketing and product brand management services, and human resource management services and adb services. Most of A Plc’s income consisted of these service. The amount invoiced corresponded to the servide “production cost”. No mark-up had been added. The tax administration had set a 7% mark-up determined on the basis on a search of comparative companies. The Supreme Administrative Court considered that, in order for A Plc’s service charges to be in accordance with the arm’s length principle, a profit margin should be added. However, the mark-up on the service charges should not have been determined on the basis of the level of profits in third-party comparables. Services provided by independent consultancy companies and parent companies in groups differ from each other in ... Continue to full case
Germany vs A Investment GmbH, June 2017, Cologne Fiscal Court , Case no 10 K 771/16

Germany vs A Investment GmbH, June 2017, Cologne Fiscal Court , Case no 10 K 771/16

A Investment GmbH, acquired all shares of B in May 2012. To finance the acquisition, A Investment GmbH took up a bank loan with a interest rate of 4.78%, a vendor loan with an interest rate of 10% and a shareholder loan with an interest rate 8% from its parent company, Capital B.V. The 8 % interest rate on the shareholder loan was determined by A Investment GmbH by applying the CUP method based on external comparables. The German tax authority, found that the interest rate of 8 % did not comply with the arm’s length principle. An assessment was issued where the interest rate was set to 5% based on the interest rate on the bank loan (internal CUP). A Investment GmbH filed an appeal to Cologne Fiscal Court. The court ruled that the interest rate of the bank loan, 4.78%, was a reliable CUP for setting the arm’s length interest rate of the controlled loan. The vendor loan was ... Continue to full case
Japan vs. Publisher Corp, April 2017, Tokyo District Court

Japan vs. Publisher Corp, April 2017, Tokyo District Court

A Japanese company entered into a transaction with a foreing group company to import English-language learning materials into Japan. The learning materials were then resold to Japanese customers. The Japanese tax authority found that the resale price method should be used for setting the arm’s-length price for the transaction. The arm’s-length price for the controlled transaction was the price at which the Japanese company resold the English-language learning materials to customers, minus a normal profit margin multiplied by the price. The “normal profit margin” in this case was found to be the weighted average ratio of gross margin to the total revenue for multiple transactions, where unrelated parties imported the same as the English-language learning materials, or goods of a similar sort, and then resold them to customers. The tax authority held that unrelated parties importing and selling learning materials should be considered comparable transactions, and appropriate adjustments could be made to account for difference. However, an important difference between ... Continue to full case
France vs. Novartis Groupe France SA, June 2008 and October 2010, CAA no No 06PA02841 and No 09LY02084

France vs. Novartis Groupe France SA, June 2008 and October 2010, CAA no No 06PA02841 and No 09LY02084

In the Novartis Groupe France SA case, the court stated that if the tax administration intends to base the transfer pricing approach on prices used between other companies or a profit split, it must first demonstrate that the price used by the related companies does not comply with the arm’s-length principle. A search for comparable transactions must be performed. Click here for translation Novataris Groupe France 2008 Se also the later decision of October 2010. Click here for translation Novataris 2010 ... Continue to full case