Tag: Deposit transaction

Funds placed with a related-party entity under fixed or variable interest terms, treated as a controlled transaction requiring arm’s length pricing. Tax authorities challenge the interest rate, currency terms, and whether the arrangement reflects comparable third-party deposit conditions under OECD TPG Chapter X.

Hungary vs "Lender" Kft, January 2021, Supreme Administrative Court, Case No. Kfv.I.35.251/2020/7

Hungary vs “Lender” Kft, January 2021, Supreme Administrative Court, Case No. Kfv.I.35.251/2020/7

/ Comparability Analysis, Financial Transactions, Transfer Pricing Methods, Withholding Tax (WHT), CDI rate, Comparability, Comparable data, Deposit rate, Deposit transaction, Expert witnesses, Interest rate, Intra-group loan, Loan, Not a bank, Other methods, Price reduced by withholding tax, Subordinated bonds, Use of other methods, Withholding tax
A Hungarian lender provided a loan to its Brazilian affiliate at CDI-linked rates, which the tax authority challenged as above arm's length. Using the CUP method with external comparables and a risk premium model, Lender Kft. argued the rates were market-consistent. Hungary's Supreme Administrative Court remanded the case for re-examination in 2021, finding the comparability analysis and use of expert evidence insufficient ... Read more
Hungary vs "Lender" Kft, February 2020, Budapest Administrative Court, Case No. 16.K.33.691/2019/18

Hungary vs “Lender” Kft, February 2020, Budapest Administrative Court, Case No. 16.K.33.691/2019/18

/ Comparability Analysis, Financial Transactions, Transfer Pricing Methods, Withholding Tax (WHT), CDI rate, Comparability, Comparable data, Deposit rate, Deposit transaction, Expert witnesses, Interest rate, Intra-group loan, Loan, Not a bank, Other methods, Price reduced by withholding tax, Subordinated bonds, Use of other methods, Withholding tax
A Hungarian lender entity charged interest on a loan to a foreign affiliate using a CDI-rate plus spread formula. The tax authority challenged whether the rates fell within arm's length ranges. The Budapest Administrative Court ruled in favour of the taxpayer in 2020, accepting the CUP method analysis and comparability evidence, including expert witness testimony and external risk premium modelling ... Read more