Tag: Tax avoidance arrangements

Italy vs "Fruit old s.a.s", March 2021, Supreme Court, Case No 8176 - R.G.N. 8952/2013, 2021-25

Italy vs “Fruit old s.a.s”, March 2021, Supreme Court, Case No 8176 – R.G.N. 8952/2013, 2021-25

Fruit old s.a.s was active in wholesale of fruit and vegetables. In 2003 it purchased products at a price higher than the market price from another company owned by the same partners, Fruit new s.r.l., and resold them at a price lower than the purchase price. Both companies were domiciled in Italy. Following these transactions the entire business of Fruit old s.a.s (premises, employees and customers) was transferred to Fruit new s.r.l. The tax authorities issued an assessment where the price of the transactions had been adjusted, since it was in the taxpayer’s interest to transfer income from the Fruit old s.a.s to Fruit new s.r.l. The company argued that the transactions in question only took place over a short period of three months. It also stated that the pricing of the transactions were motivated by an “intra-group strategy”. Lower courts had ruled in favour of the company and set aside the assessment of the tax authorities. Judgement of the ... Read more
Italy vs Spazio Immobiliare 2000 s.r.l., September 2020, Supreme Court, Cases No 20823/2020

Italy vs Spazio Immobiliare 2000 s.r.l., September 2020, Supreme Court, Cases No 20823/2020

The facts underlying the notice of assessment are undisputed: a) Casa di Cura Santa Rita s.p.a. grants a free loan to Spazio Immobiliare 2000 s.r.l.; b) the latter company, substantially lacking its own means and wholly controlled by the former, uses the parent company’s loan in full to purchase certain assets; c) said assets are rented to the parent company against payment of a consideration, partly due also for the year 2004; d) payment of the consideration for the years of rental is deferred until 31/12/2005. In view of these facts, the tax authorities makes the following contentions: (a) the parent company did not directly purchase the goods and services from the subsidiary because it would not have been able to deduct the VAT due to the fact that it carried out almost all exempt transactions; (b) the subsidiary benefited from a VAT credit for the year 2004 (arising from the purchase of the goods then leased) which was then ... Read more
Russia vs Continental Tires RUS LLC , Aug. 2014, Russian Court of Appeal, Case No А40- 251161/2015

Russia vs Continental Tires RUS LLC , Aug. 2014, Russian Court of Appeal, Case No А40- 251161/2015

Continental Tires RUS LLC had been issued a substantial loan from Continental AG (Germany). Following an audit the tax authority established that the main purpose of the loans was the systematic withdrawal of funds abroad. According to the tax authorities the loan transactions were concluded for the purpose of artificially raising cash in the form of loans and, accordingly, artificially increasing accounts payable, while the shortage of working capital arose and arises from the special, continuous and coordinated provision of deferred payments to buyers of tyre products. Judgement of the Russian Court of Appeal The Court ruled in favor of the tax administration. Excerpt: “The provisions of Article 252 of the Tax Code stipulate that the taxpayer reduces the income received by the amount of expenses incurred. Expenses are considered to be justified and documented expenses of the taxpayer. Reasonable expenses are defined as economically justified expenses, the evaluation of which is expressed in monetary form. Documented expenses shall mean ... Read more