On 16 June 2022 McDonald’s France entered into an settlement agreement according to which it will pay €1.245 billion in back taxes and fines to the French tax authorities. The settlement agreement resulted from investigations carried out by the French tax authorities in regards to abnormally high royalties transferred from McDonald’s France to McDonald’s Luxembourg following an intra group restructuring in 2009. McDonald’s France doubled its royalty payments from 5% to 10% of restaurant turnover, and instead of paying these royalties to McDonald’s HQ in the United States, going forward they paid them to a Swiss PE of a group company in Luxembourg, which was not taxable of the amounts. During the investigations it was discovered that McDonald’s royalty fees could vary substantially from one McDonald’s branch to the next without any justification other than tax savings for the group. This conclusion was further supported by statements of the managers of the various subsidiaries as well as documentation seized which ... Read more

Atlas Copco Tanzania Ltd. is part of Atlas Copco Group, a conglomerate of multinational companies headquartered in Sweden. The group produces and sell compressors, vacuum solutions, generators, pumps, power tools etc. Apart from supplying generators in Tanzania on its own, Atlas Tanzania sold generators as an agent of its sister companies which had no presence in the country. For the latter type of sales, known as “indent sales”, Atlas Tanzania earned a commission. Being oblivious that the commission income attracted Value Added Tax (“VAT”), Atlas Tanzania did not file any VAT returns on indent sales until its external auditors, KPMG, informed it of the requirement. By then, Atlas Tanzania had posted in its sales ledgers commission income amounting to TZS. 134,413,682,281.00 for FY 2007 and 2008. Atlas Tanzania then accounted for VAT on the commission for the years 2007 and 2008 amounting to TZS. 5,692,574,000.00, which was paid through the VAT returns filed in 2009. This amount was much smaller ... Read more

Cadence is a US group active in the business of electronic design automation. Cadence Taiwan provided R&D services to Cadence US. In 2003, based on a transfer pricing study, Cadence US concluded that the service fees that it had paid to Cadence Taiwan in 2002 were too high and therefore instructed Cadence Taiwan to book a significant sales allowance amount in it’s 2003 and 2004 accounts. A debit note was send to Cadence Taiwan and a tax deduction was claimed. Cadence brought the case to court The Supreme Administrative court rejected Cadence’s appeal. The service agreement between Cadence US and Cadence Taiwan did not contain any provision for a retroactive adjustment of the service fees. The debit notes from Cadence US were not signed off by Cadence Taiwan to acknowledge its agreement to the adjustments. Therefore, the subsequent sales allowances booked by Cadence Taiwan were purely for the purpose of allocating profits without any economic substance, and thus could not ... Read more