Tag: Consolidation requirement

TPG2022 Chapter III paragraph 3.54

/ Comparability adjustments, Comparability analysis, Consolidation requirement, OECD Transfer Pricing Guidelines (2022), TPG2022 Chapter III: Comparability Analysis, Transparent systematic and verifiable
Ensuring the needed level of transparency of comparability adjustments may depend upon the availability of an explanation of any adjustments performed, the reasons for the adjustments being considered appropriate, how they were calculated, how they changed the results for each comparable and how the adjustment improves comparability. Issues regarding documentation of comparability adjustments are discussed in Chapter V ... Read more

TPG2017 Chapter III paragraph 3.54

/ Comparability adjustments, Comparability analysis, Consolidation requirement, OECD Transfer Pricing Guidelines (2017), Transparent systematic and verifiable
Ensuring the needed level of transparency of comparability adjustments may depend upon the availability of an explanation of any adjustments performed, the reasons for the adjustments being considered appropriate, how they were calculated, how they changed the results for each comparable and how the adjustment improves comparability. Issues regarding documentation of comparability adjustments are discussed in Chapter V ... Read more
Germany vs. "Capital reduction Gmbh", October 2014, Supreme Tax Court judgment I R 31/13

Germany vs. “Capital reduction Gmbh”, October 2014, Supreme Tax Court judgment I R 31/13

/ Arm's length principle, Consolidation requirement, Decision in favor of taxpayer, Financial Transactions, General Anti-Avoidance Rules (GAAR), Germany, Non-recognition and re-characterisation, Non-Recognition and Recharacterisation, Requalification, Share capital, Shares and Dividends, Supreme Administrative Court, Withholding tax, Withholding Tax (WHT)
A German company resolved a share capital reduction of €16 m in preparation for a capital repayment to avoid an IFRS consolidation requirement for its sole shareholder, a public utility. It took the reduction to capital reserve, waited as required by the German Company Act for one year after a public announcement to it’s creditors, reported the reduction to the German trade registry and repaid an amount of €4 m to the shareholder. This repayment was sufficient to reduce the assets below the level for the consolidation requirement. The tax administration recharacterised the payment to a “dividend distribution” subject to withholding tax under the German Corporate Tax Act provision to the effect that payments to shareholders are deemed to be made from retained earnings unless unambiguously specified as repayments of share capital. The Supreme Tax Court concluded that the unambiguous specification need not be solely in the capital reduction/repayment resolution itself. The reduction resolution stated being preparatory to a capital ... Read more