The tax authorities had issued a notice of assessment in which payments for a parent company guarantee had been adjusted on the basis of the arm’s length principle. The Administrative Court of Appeal annulled the assessment. The tax authorities filed an appeal with the Supreme Administrative Court. Judgement of the Court The Supreme Administrative Court upheld the decision of the Administrative Court of Appeal and dismissed the appeal of the tax authorities. According to the Court, I – The Tax Administration may, under the provisions of article 58 of the CIRC, make corrections to the taxable income whenever, by virtue of special relations between the taxpayer and another person, whether or not subject to IRC, different conditions have been established in certain operations from those that are generally agreed upon between independent persons and these particular conditions have led to the profit ascertained on the basis of accounting being different from that which would have been ascertained had such special ...
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