Tag: Extraordinary circumstances

Conditions so abnormal or unforeseeable — currency controls, political crises, or force majeure — that strict arm’s length pricing or income accrual rules are displaced. Tax authorities challenge whether circumstances genuinely preclude payment or justify deviation from standard transfer pricing outcomes.

Denmark vs EAC Invest A/S, October 2021, Court of Appeal, Case No SKM2021.705.OLR

Denmark vs EAC Invest A/S, October 2021, Court of Appeal, Case No SKM2021.705.OLR

/ Financial Transactions, Non-Recognition and Recharacterisation, Royalty and License Payments, Blocked income, Blocked payment, Currency restriction, Extraordinary circumstances, Force majeure, Foreign currency restrictions, Government interventions, Government policies, Governmental regulation, Interest, Lack of comparables, Late payment interest, Recharacterisation, Royalty, Trademark (trade name), Venezuela
A Danish parent company was not taxed on interest accruing on unpaid royalties owed by its Venezuelan subsidiary due to exceptional currency restrictions in Venezuela between 2008 and 2011. The tax authorities challenged the tribunal's ruling, but the Danish Court of Appeal upheld the decision in 2021, finding no basis to impute interest income and rejecting arguments that later dividends or a 2013 restructuring triggered deferred taxation ... Read more