Eli Lilly ÄŒR imports pharmaceutical products purchased from Eli Lilly Export S.A. (Swiss sales and marketing hub) into the Czech Republic and Slovakia and distributes them to local distributors. The arrangement between the local company and Eli Lilly Export S.A. is based on a Service Contract in which Eli Lilly ÄŒR is named as the service provider to Eli Lilly Export S.A. (the principal). Eli Lilly ÄŒR was selling the products at a lower price than the price it purchased them for from Eli Lilly Export S.A. According to the company this was due to local price controls of pharmaceuticals. At the same time, Eli Lilly ÄŒR was also paid for providing marketing services by the Swiss HQ, which ensured that Eli Lilly ÄŒR was profitable, despite selling the products at a loss. Eli Lilly ÄŒR reported the marketing services as a provision of services with the place of supply outside of the Czech Republic; therefore, the income from such ...
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