Amadeus Global Travel Distribution Limited is a Tanzanian branch of a Kenya-resident entity, itself a wholly owned subsidiary of Amadeus ITG based in Madrid, Spain. The appellant's business consists of commercialising the Amadeus GDS system in Tanzania. The dispute concerned the income year 2015 and ... Read more

KAI S.r.l. (formerly Shell Italia Aviazione s.r.l.) is an Italian company operating in the oil sector, specifically in the marketing of aviation fuel (jet fuel) for the Shell Italia group. It was wholly owned by Shell Italia Holding S.p.A. The dispute concerned the deductibility of intra-group costs ... Read more

Íslenska kalkþörungafélagið ehf. ("the Icelandic Limestone Algae Company") operated a calcified algae factory in Iceland, harvesting seaweed from the seabed, cleaning, drying and exporting it almost entirely to its Irish parent company, Marigot Ltd. Marigot Ltd. further processed the raw material in ... Read more

S.N.A Group Pty Ltd and ATPR Pty Ltd are Australian operating companies within the Coronis real estate group. The group had undertaken a restructuring in 2005 by which the operating entities were separated from asset-owning entities — CLAARS Pty Ltd as trustee of the Henry Trust (which held IP) ... Read more

A Greek company appealed the disallowance of intra-group management service fees deducted in its 2013 taxable profits. The company argued the tax authority had improperly shifted the burden of proof. Greece's Supreme Administrative Court rejected the appeal in 2025, ruling that the burden of proving deductibility rested with the taxpayer and that the invoices, contracts, and supporting documents lacked sufficient specificity to establish a genuine link to business activity ... Read more

Olympus Medical Systems India, a subsidiary of Olympus Corp, reported losses in FY 2012–2013 and failed to provide audited financials of its associated enterprises during a transfer pricing audit. The Indian tax authority applied the Residual Profit Split Method to benchmark AMP expenses using a Bright Line Test. The Delhi Income Tax Appellate Tribunal ruled in 2022 that Olympus could not benefit from its own non-cooperation and upheld the authority's approach, remanding the matter for re-examination ... Read more

In other words, in this situation where the taxpayer will have an ongoing business relationship as supplier to the foreign associated enterprise that carries on an activity previously carried on by the taxpayer, the taxpayer and the foreign associated enterprise have the opportunity to obtain economic and commercial benefits through that relationship (e.g. the sale price of goods) which may explain for instance why compensation through an up-front capital payment for transfer of the business was foregone, or why the future transfer price for the products might be different from the prices that would have been agreed absent a restructuring operation. In practice, however, it might be difficult to structure and monitor such an arrangement. While taxpayers are free to choose the form of compensation payments, whether up-front or over time, tax administrations when reviewing such arrangements would want to know how the compensation for the post-restructuring activity was possibly affected to take account of the foregone compensation, if any, ... Read more

It may be relevant in assessing the reliability of a valuation model to consider the purposes for which the valuation was undertaken and to examine the assumptions and valuation parameters in different valuations undertaken by the taxpayer for non-tax purposes. It would be reasonable for a tax administration to request an explanation for any inconsistencies in the assumptions made in a valuation of an intangible undertaken for transfer pricing purposes and valuations undertaken for other purposes. For example, such requests would be appropriate if high discount rates are used in a transfer pricing analysis when the company routinely uses lower discount rates in evaluating possible mergers and acquisitions. Such requests would also be appropriate if it is asserted that particular intangibles have short useful lives but the projections used in other business planning contexts demonstrate that related intangibles produce cash flows in years beyond the “useful life” that has been claimed for transfer pricing purposes. Valuations used by an MNE ... Read more

Small to medium sized enterprises are entering into the area of transfer pricing and the number of cross-border transactions is ever increasing. Although the arm’s length principle applies equally to small and medium sized enterprises and transactions, pragmatic solutions may be appropriate in order to make it possible to find a reasonable response to each transfer pricing case ... Read more

It is a good practice for taxpayers to set up a process to establish, monitor and review their transfer prices, taking into account the size of the transactions, their complexity, level of risk involved, and whether they are performed in a stable or changing environment. Such a practical approach would conform to a pragmatic risk assessment strategy or prudent business management principle. In practice, this means that it may be reasonable for a taxpayer to devote relatively less effort to finding information on comparables supporting less significant or less material controlled transactions. For simple transactions that are carried out in a stable environment and the characteristics of which remain the same or similar, a detailed comparability (including functional) analysis may not be needed every year ... Read more

When undertaking a comparability analysis, there is no requirement for an exhaustive search of all possible relevant sources of information. Taxpayers and tax administrations should exercise judgment to determine whether particular comparables are reliable ... Read more

One question that arises when putting the need for comparability analyses into perspective is the extent of the burden and costs that should be borne by a taxpayer to identify possible comparables and obtain detailed information thereon. It is recognised that the cost of information can be a real concern, especially for small to medium sized operations, but also for those MNEs that deal with a very large number of controlled transactions in many countries. Paragraph 4.28 and Chapter V contain explicit recognition of the need for a reasonable application of the requirement to document comparability ... Read more

In order for the process to be transparent, it is considered a good practice for a taxpayer that uses comparables to support its transfer pricing, or a tax administration that uses comparables to support a transfer pricing adjustment, to provide appropriate supporting information for the other interested party (i.e. tax auditor, taxpayer or foreign competent authorities) to be able to assess the reliability of the comparables used. See paragraph 3.36 for a discussion of information available to tax administrations that is not disclosed to taxpayers. General guidance on documentation requirements is found at Chapter V of these Guidelines. See also the Annex II to Chapter IV “Guidelines for conducting Advance Pricing Arrangements under the Mutual Agreement Procedure (MAP APAs)” ... Read more

A Swiss corporation challenged a Dutch tax authority information request as disproportionate, arguing that demands for decision-making documents and email files exceeded the inspector's powers under Article 47 of the AWR. The Rechtbank Noord-Nederland ruled in favour of the tax authority in November 2019, finding the broad request justified given the need to assess whether the Swiss corporation had effective management or a permanent establishment in the Netherlands ... Read more

Microsoft Denmark's tax authority argued that OEM sales of pre-installed software to Danish end users should have been included in calculating the company's local marketing commissions under its agreement with Microsoft Ireland Operations Limited. In a close 3-2 decision, the Danish Supreme Court ruled in favour of Microsoft, finding the tax authorities had not met the burden of proof required to justify a discretionary reassessment of the transfer pricing arrangement ... Read more

Danish tax authorities assessed Microsoft Denmark DKK 308 million, arguing the company had not been properly remunerated for marketing activities because OEM sales to Danish customers were excluded from local commission calculations. Microsoft argued for dismissal, citing similar cases lost or dropped by Sweden, Norway, and Finland. The Danish Court of Appeal ruled in favour of Microsoft in 2018, a decision later confirmed by the Supreme Court ... Read more

In other words, in this situation where the taxpayer will have an ongoing business relationship as supplier to the foreign associated enterprise that carries on an activity previously carried on by the taxpayer, the taxpayer and the foreign associated enterprise have the opportunity to obtain economic and commercial benefits through that relationship (e.g. the sale price of goods) which may explain for instance why compensation through an up-front capital payment for transfer of the business was foregone, or why the future transfer price for the products might be different from the prices that would have been agreed absent a restructuring operation. In practice, however, it might be difficult to structure and monitor such an arrangement. While taxpayers are free to choose the form of compensation payments, whether up-front or over time, tax administrations when reviewing such arrangements would want to know how the compensation for the post-restructuring activity was possibly affected to take account of the foregone compensation, if any, ... Read more

Small to medium sized enterprises are entering into the area of transfer pricing and the number of cross-border transactions is ever increasing. Although the arm’s length principle applies equally to small and medium sized enterprises and transactions, pragmatic solutions may be appropriate in order to make it possible to find a reasonable response to each transfer pricing case ... Read more

It is a good practice for taxpayers to set up a process to establish, monitor and review their transfer prices, taking into account the size of the transactions, their complexity, level of risk involved, and whether they are performed in a stable or changing environment. Such a practical approach would conform to a pragmatic risk assessment strategy or prudent business management principle. In practice, this means that it may be reasonable for a taxpayer to devote relatively less effort to finding information on comparables supporting less significant or less material controlled transactions. For simple transactions that are carried out in a stable environment and the characteristics of which remain the same or similar, a detailed comparability (including functional) analysis may not be needed every year ... Read more

When undertaking a comparability analysis, there is no requirement for an exhaustive search of all possible relevant sources of information. Taxpayers and tax administrations should exercise judgment to determine whether particular comparables are reliable ... Read more

One question that arises when putting the need for comparability analyses into perspective is the extent of the burden and costs that should be borne by a taxpayer to identify possible comparables and obtain detailed information thereon. It is recognised that the cost of information can be a real concern, especially for small to medium sized operations, but also for those MNEs that deal with a very large number of controlled transactions in many countries. Paragraph 4.28 and Chapter V contain explicit recognition of the need for a reasonable application of the requirement to document comparability ... Read more

In order for the process to be transparent, it is considered a good practice for a taxpayer that uses comparables to support its transfer pricing, or a tax administration that uses comparables to support a transfer pricing adjustment, to provide appropriate supporting information for the other interested party (i.e. tax auditor, taxpayer or foreign competent authorities) to be able to assess the reliability of the comparables used. See paragraph 3.36 for a discussion of information available to tax administrations that is not disclosed to taxpayers. General guidance on documentation requirements is found at Chapter V of these Guidelines. See also the Annex to Chapter IV “Guidelines for conducting Advance Pricing Arrangements under the Mutual Agreement Procedure (MAP APAs)” ... Read more