Tag: Median

Spain vs Ikea, March 2019, Audiencia Nacional (TEAC), Case No SAN 1072/2019

Spain vs Ikea, March 2019, Audiencia Nacional (TEAC), Case No SAN 1072/2019

The tax administration had issued an adjustment to the taxable profit of IKEA’s subsidiary in Spain considering that taxable profit in years 2007, 2008, and 2009 had not been determined in accordance with the arm’s length principle. In 2007 taxable profits had been below the interquartile range and in 2008 and 2009 taxable profits had been within the interquartile range but below the median. In all years taxable profits had been adjusted to the median found in the benchmark study. With respect to 2007 where the profit had been outside the interquartile range, the court held that profits should be adjusted to the lower quartile instead of the median, as argued by the tax administration. The tax administration had not demonstrated comparability defect in the comparability study provided by the taxpayer that justified using the median in the assessment of the arm’s length profit. For 2008 and 2009 where the taxable profit had been within the interquartile range – but ... Continue to full case
Italy vs BI S.r.l, November 2018, Tax Tribunal of Milano, Case no. 5445/3/2018

Italy vs BI S.r.l, November 2018, Tax Tribunal of Milano, Case no. 5445/3/2018

The Italian tax authorities had issued an assessment against a local distribution company of a multinational group, where the transfer pricing analysis conducted by the taxpayer had been disregarded. The tax authorities, carried out a new benchmark analysis based on the transactional net margin method (“TNMM”) and adjusted the company’s profitability to the median. The Tax Court cancelled the assessment, noting that the profitability range calculated by the tax authorities “goes, for the year 2013, from a minimum value of 1.40% to a maximum of 18.28%. The local distribution company obtained a 8.38%. Since the last percentage falls between the minimum and the maximum, for this judge the provisions of the aforementioned ministerial decree have to be applied (i.e. Ministerial Decree 14 May 2018)“. Click here for translation Commissione Tributaria Provinciale Lombardia Milano ... Continue to full case
Germany vs Clothing Distribution Gmbh, October 2001, BFH Urt. 17.10.2001, IR 103/00

Germany vs Clothing Distribution Gmbh, October 2001, BFH Urt. 17.10.2001, IR 103/00

A German GmbH distributed clothing for its Italian parent. The German tax authorities issued a tax assessment based on hidden profit distribution from the German GmbH in favor of its Italien parent as a result of excessive purchase prices, which led to high and continuous losses in Germany.  The tax authorities determined the arm’s length price based on purchase prices, which the German GmbH had paid to external suppliers. However, these purchases accounted for only 5% of the turnover. The German Tax Court affirmed in substance a vGA (hidden profit distribution) as the tax authorities had provided no proff of deviation from arm’s length prices. If a hidden profit distribution is to be accepted, the profit shall be increased by the difference between the actually agreed price and the price agreed by independent contractual parties under similar circumstances – the arm’s length price. Where a range of arm’s length prices is produced, there are no legal basis for adjustment to the ... Continue to full case