Tag: Debt pushdown

Australia vs Mylan Australia Holding Pty Ltd., March 2024, Federal Court, Case No [2024] FCA 253

Australia vs Mylan Australia Holding Pty Ltd., March 2024, Federal Court, Case No [2024] FCA 253

Mylan Australia Holding is a subsidiary of the multinational pharmaceutical company Mylan Group. Mylan Australia Holding is the head of the Australian tax consolidated group, which includes its subsidiary Mylan Australia Pty. In 2007, Mylan Australia Pty acquired the shares of Alphapharm Pty Ltd and a substantial loan (A$923,205,336) was provided by a group company in Luxembourg to finance the acquisition. In subsequent years the interest expense was deducted from the taxable income of Mylan’s Australian tax group. The Australian Taxation Office (ATO) issued amended assessments to Mylan Australia Holding disallowing approximately AUD 589 million of interest deductions claimed for the 2007 to 2017 tax years. The ATO had initially pursued the structure as a transfer pricing issue, but ultimately argued that the deductions should be disallowed under the general anti-avoidance rule. Mylan Australia Holding appealed to the Federal Court. Judgment of the Court The Federal Court decided in favour of Mylan Australia Holding and set aside the amended assessment ... Read more
Czech Republic vs Johnson Controls Czech s.r.o., December 2023, Municipal Court in Prague, Case No 6710 Af 29/2019 - 2010

Czech Republic vs Johnson Controls Czech s.r.o., December 2023, Municipal Court in Prague, Case No 6710 Af 29/2019 – 2010

The matter of the dispute was an acquision witch had been financed by a debt push down resulting in interest payments that reduced the taxable income of a Czech subsidiary. The tax authortites disallowed the interest deductions. Decision of the Court The Court decided in favour of the tax authorities. Excerpt in English “The Court is in no doubt that the circumstances of the entire restructuring of the Johnson Controls group, with its impact on its members in the Czech Republic, as proven in the tax proceedings, lead to the conclusion that the purpose of Section 24(1) of the ITA was not achieved, since the acquisition loan or the interest payments arising therefrom do not, by their actual nature, constitute expenditure for the achievement, securing or maintenance of income generated by the production activities of JCAS (objective criterion). At the same time, the tax authorities have demonstrated, and the applicant has failed to demonstrate to the contrary, that obtaining a ... Read more
Australia vs Mylan Australia Holding Pty Ltd., June 2023, Federal Court, Case No [2023] FCA 672

Australia vs Mylan Australia Holding Pty Ltd., June 2023, Federal Court, Case No [2023] FCA 672

Mylan Australia Holding is a subsidiary of the multinational Mylan Group, which is active in the pharmaceutical industry. Mylan Australia Holding is the head of the Australian tax consolidated group, which includes its subsidiary Mylan Australia Pty. In 2007, Mylan Australia Pty acquired the shares of Alphapharm Pty Ltd. and to finance the acquisition, a substantial loan (A$923,205,336) was provided by a group company in Luxembourg. In the following years interest expenses was deducted from the taxable income of Mylan’s Australian tax group. The tax authorities issued a notice of assessment for the years 2009 to 2020 disallowing the deduction of excessive interest expense incurred as a result of the financing arrangement. Initially the tax authorities relied on both transfer pricing provisions and the general anti-avoidance provision (Pt IVA), but subsequently they relied only on the latter as the basis for the assessment. Mylan Australia Holding filed appeals on 4 June 2021 in respect of the 2009-2019 assessment and on ... Read more
Japan vs Universal Music Corp, April 2022, Supreme Court, Case No 令和2(行ヒ)303

Japan vs Universal Music Corp, April 2022, Supreme Court, Case No 令和2(行ヒ)303

An intercompany loan in the form of a so-called international debt pushdown had been issued to Universal Music Japan to acquire the shares of another Japanese group company. The tax authority found that the loan transaction had been entered for the principal purpose of reducing the tax burden in Japan and issued an assessment where deductions of the interest payments on the loan had been disallowed for tax purposes. The Tokyo District Court decided in favour of Universal Music Japan and set aside the assessment. The Court held that the loan did not have the principle purpose of reducing taxes because the overall restructuring was conducted for valid business purposes. Therefore, the tax authorities could not invoke the Japanese anti-avoidance provisions to deny the interest deductions. In 2020 the decision of the district court was upheld by the Tokyo High Court. The tax authorities then filed an appeal with the Supreme Court Decision of the Court The Supreme Court dismissed ... Read more
Japan vs. Universal Music Corp, June 2019, Tokyo District Court, Case No 平成27(行ウ)468

Japan vs. Universal Music Corp, June 2019, Tokyo District Court, Case No 平成27(行ウ)468

An intercompany loan in the form of a so-called international debt pushdown had been issued to Universal Music Japan to acquire the shares of another Japanese group company. The tax authority found that the loan transaction had been entered for the principal purpose of reducing the tax burden in Japan and issued an assessment where deductions of the interest payments on the loan had been disallowed for tax purposes. Decision of the Court The Tokyo District Court decided in favour of Universal Music Japan and set aside the assessment. The Court held that the loan did not have the principle purpose of reducing taxes because the overall restructuring was conducted for valid business purposes. Therefore, the tax authorities could not invoke the Japanese anti-avoidance provisions to deny the interest deductions. The case is now pending at the Tokyo High Court awaiting a final decision. Click here for English Translation Jap UM 2019 ... Read more