A Korean limited risk distributor importing and selling vehicles incurred substantial losses between 2017 and 2021 following a regulatory sales suspension, undertaking market penetration measures funded partly by parent reimbursements. The tax authority disputed the treatment of those compensations as non-operating income. The National Tax Tribunal upheld the authority's position in 2025, ruling that a limited risk distributor cannot bear market penetration costs and that parent reimbursements must be classified as operating income under the TNMM ... Read more

A Paris luxury shoe retailer operating under the Roger Vivier brand had generated negative net margins since 2003. French tax authorities challenged low resale prices on unsold goods and excessive brand promotion costs as indirect profit transfers, applying a 6.76% average operating margin benchmark. The Paris Administrative Court of Appeal upheld the adjustments in December 2024, ruling in favour of the tax authority ... Read more

A Greek elevator company used TNMM for related-party sales, but the tax authority substituted a cost plus method using internal third-party comparables, raising taxable income. The Administrative Court largely upheld the authority's approach in 2024, finding internal comparables reliable after adjustments. However, it annulled the adjustment for sales to a Turkish affiliate, ruling that market differences and a market-penetration strategy made those sales incomparable to Swedish or Czech transactions ... Read more

Skechers USA Italia SRL challenged a 2004 transfer pricing assessment in which Italian tax authorities attributed recurring losses to artificially inflated purchase prices paid to its Swiss parent. The taxpayer argued losses reflected start-up costs and a competitive market. After lower courts sided with the authorities, Italy's Supreme Court in 2022 ruled mostly in favour of the taxpayer and remanded the case for reexamination ... Read more

A Costa Rican corrugated packaging company declared losses on controlled transactions after setting export prices below cost to its related Nicaraguan entity, claiming a market penetration strategy justified the pricing. The tax authority adjusted the prices under the arm's length principle and imposed a gross negligence fine. Costa Rica's Supreme Court dismissed the company's appeal in 2018, upholding the assessment and affirming the OECD Transfer Pricing Guidelines as valid interpretive authority ... Read more

A Slovenian distributor sought to justify excess marketing costs as part of a market penetration strategy. The tax authority challenged the deduction, and the Supreme Court upheld that position in 2016, ruling that OECD Guidelines are not directly binding in Slovenia and that marketing costs can only be linked to a business strategy if the content and substance of that strategy is clearly demonstrated ... Read more

A Russian subsidiary of the Suzuki/Itochu group reported losses in 2009, prompting a tax authority audit concluding that non-arm's length transfer pricing and excessive cost deductions caused the losses. The Arbitration Court ruled in favour of the tax authority in 2016, finding that the resale price method had been correctly applied and that the purchase price of vehicles had been overstated, upholding the assessment in full ... Read more

L'Oreal India applied the Resale Price Method to benchmark its distribution margins, but the tax authority rejected this approach due to persistent losses and switched to TNMM. The Income Tax Appellate Tribunal in 2016 sided with the taxpayer, finding that RPM was the most appropriate method for a distributor that resells without further processing, and that sustained losses reflected a legitimate market penetration strategy rather than non-arm's-length pricing ... Read more

A German limited partnership purchasing goods almost exclusively from its Dutch parent granted customers rebates, bonuses and discounts without charging corresponding interest on extended payment terms. The German tax authorities estimated a 3% profit shift to the Netherlands and adjusted profits accordingly. The Bundesfinanzhof ruled in favour of the taxpayer in 1980, finding the adjustments were not justified under the arm's length principle ... Read more