Tag: Pro forma-debt

Financing arrangement characterised by tax authorities as lacking economic substance, where purported debt is recharacterised or disregarded. Disputes centre on whether intra-group loans reflect genuine borrowing capacity, commercial reality, and terms independent parties would negotiate under OECD TPG Chapter I.

Norway vs Fortis Petroleum Norway AS, March 2022, Court of Appeal, Case No LB-2021-26379

Norway vs Fortis Petroleum Norway AS, March 2022, Court of Appeal, Case No LB-2021-26379

/ Business Restructuring, Disallowed Deduction, Financial Transactions, Services and Fees, Tax Avoidance Schemes, Administrative services, Delineation – Substance over Form, Disallowed deduction, Equity or Debt/Loan, Exploration costs, Exploration reimbursement scheme, Financial capacity to assume risk, No control over risk, Oil and gas, Penalty/Fine, Pro forma-debt, Seismic data, Tax carousel, Termination fee, Written agreement
A Norwegian oil exploration company purchased seismic data and administrative services from related parties, funding the acquisition through a convertible intra-group loan, and deducted all associated costs under Norway's petroleum exploration refund scheme. The Petroleum Tax Office disallowed the deductions and imposed penalties, finding the arrangements lacked substance. The Court of Appeal upheld the tax authority's decisions in full in March 2022 ... Read more