Tag: No written terms

Chile vs Wallmart Chile S.A, October 2020, Tax Court, Case N° RUC N° 76.042.014K

Chile vs Wallmart Chile S.A, October 2020, Tax Court, Case N° RUC N° 76.042.014K

In 2009, Walmart acquired a majority in Distribución y Servicio D&S S.A., Chile’s leading food retailer. With headquarters in Santiago, Walmart Chile operates several formats including hypermarkets, supermarkets and discount stores. Following an audit by the tax authorities related to FY 2015, deduction of interest payments in the amount of CH$8.958,304,857.- on an “intra-group loan” was denied resulting in a tax payable of Ch$1,786,488,290. According to Wallmart, the interest payments related to debt in the form of future dividend payments/profit distributions. Decision of the Tax court “…this Court concludes that the claimant has not been able to prove the existence of a current account between Inversiones Walmart and Walmart Chile, nor has it been able to prove the appropriateness of the reduction in expenses in the amount of CH$8.958,304,857.- for interest paid to its related company, because it did not justify the need for such disbursement for the purpose of getting into debt in order to distribute profits among the ... Continue to full case
Poland vs Cash Pool B sp z.o.o., November 2019, Supreme Administrative Court, Case No II FSK 3798/17

Poland vs Cash Pool B sp z.o.o., November 2019, Supreme Administrative Court, Case No II FSK 3798/17

At issue in this case was whether a deposit in a cash pool constituted a loan. According to the company, cash transfers made as part of cash pooling cannot be considered a loan agreement because they do not contain elements that are material to the content of such contracts. In 2018 the provincial court issued a decision stating that a cash pool deposit constituted the granting of a loan irrespective of lacking written contracts. This decision was then appealed to the Supreme Administrative Court by the company. From the decision of the Supreme Administrative Court From an economic point of view, the financial system presented in the application involves the granting of loans because, as a result of financing the negative balance shown by the contractual participant by a surplus of funds accumulated by other participants, the participant is not obliged to pay interest to the bank for his debit an invoice that would have arisen if the shortcoming had ... Continue to full case
Argentina vs Compañía Ericsson S.A.C.I., August 2007, Tribunal Fiscal de la Nación, Case No 15/8/2007

Argentina vs Compañía Ericsson S.A.C.I., August 2007, Tribunal Fiscal de la Nación, Case No 15/8/2007

Compañía Ericsson S.A.C.I had received a loan from Ericsson Treasury Services AB – based in Sweden for an amount of $12,000,000. The interest rate had been set at 8,80% The tax authorities considered that the loan had not been agreed at arm’s length – referring to lack of implementation of the loan, the lack of authorization by the board of directors and the lack of guarantee and collateral, taking into account the considerable amount and high level of indebtedness of the company. Decision of the Tax Court The Court ruled in favour of the taxpayer. Agreements between related entities may not be covered by the formal requirements that would be observed between independent parties. Between related parties “the terms of a transaction may arise from correspondence and communications between the parties, rather than from a contract”. “In the present case, observation of the conduct of the entities involved in the transaction does not allow the inference to be drawn that ... Continue to full case