A Czech company deducted costs for advertising and promotional services purchased through two intermediary entities. The tax authority concluded the arrangements were structured to reduce the tax base and applied the CUP method using direct contract prices as references to establish arm's length pricing. The Regional Court ruled in favour of the tax authority in April 2023, upholding the adjustments to the taxpayer's tax base ... Read more

Kellogg India Private Limited distributed Pringles products imported from its Singapore affiliate, which acted as a cost-plus intermediary. The company selected the Singapore entity as the tested party for benchmarking. Indian tax authorities rejected this approach, instead selecting Kellogg India as the tested party. The Mumbai Income Tax Appellate Tribunal ruled in favour of the taxpayer in February 2022, upholding the foreign affiliate as the appropriate tested party ... Read more

LCN Group deducted costs for marketing services from related parties at prices 23 to 56 times higher than the underlying advertising cost. Czech tax authorities challenged the arm's length nature of these payments. The Regional Court annulled the assessment, finding the comparability analysis insufficient. In 2021, the Supreme Administrative Court reversed that decision and remanded the case to the Regional Court for further examination ... Read more

An Italian plastic pipes manufacturer deducted marketing costs incurred partly for its foreign subsidiaries without recharging them. The tax authorities assessed additional income, arguing the costs should have been recharged. The Court of First Instance sided with the taxpayer, and Italy's Supreme Court dismissed the tax authority's appeal in January 2021, confirming that the burden of proving deviation from normal market value rests with the tax authorities ... Read more

A Czech company deducted costs for marketing services provided by related parties, but tax authorities challenged the arm's length nature of the prices and issued an assessment. The Regional Court annulled the assessment in 2020, finding the tax authorities had insufficiently analysed the conditions of the controlled transactions, including the commercial strength and advertising capacity of the parties involved ... Read more

A Czech taxpayer deducted advertising campaign expenses paid to related entities for tax years 2007–2009. The tax authority disallowed the deductions, finding the agreed prices differed from arm's length prices under Article 23(7)(b)(5) of the Income Tax Act. The Regional Court and the Supreme Administrative Court both upheld the adjustment in 2019, confirming that proof of active participation by all chain entities was not required to establish the taxpayer's involvement ... Read more

LG Electronics India faced transfer pricing adjustments from Indian tax authorities applying the bright-line test to advertising and marketing expenses, alleging excess AMP spend promoted the foreign parent's brand. Authorities also challenged royalty rates and disallowed intra-group service deductions. The Income Tax Appellate Tribunal ruled mostly in the taxpayer's favour in 2019, finding the Revenue had failed to demonstrate with tangible evidence that an international transaction existed regarding AMP expenditure ... Read more

A Peruvian soft drink distributor priced its imports of concentrates and finished goods from related parties using the resale price method. Following an audit, the tax authority rejected RPM as unsuitable given the company's extensive marketing activities and applied TNMM instead, issuing an upward profit adjustment. In October 2018, Peru's Tax Court dismissed the distributor's appeal, confirming TNMM as the most appropriate method in these circumstances ... 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 Czech company challenged the tax authority's arm's length pricing of advertising services. The Supreme Administrative Court upheld the authority's use of the comparable uncontrolled price method, finding that factors such as advertising space size, event type, and duration were properly considered when comparing controlled and uncontrolled transactions. JN Trans's appeal was dismissed in 2014 ... Read more

Roche Indonesia's deductions for royalties paid to F. Hoffmann-La Roche & Co. were disallowed by Indonesian tax authorities and upheld by the Tax Court in 2014. The court found that Roche Indonesia failed to prove the value, existence, and ownership of the underlying intangible assets. Half of the disputed marketing and promotion costs were allowed, with the remainder disallowed, resulting in a decision mostly favouring the tax authority ... Read more