Tag: Terms and conditions

Germany vs "G-Corp GmbH", June 2021, Bundesfinanzhof, Case No I R 32/17

Germany vs “G-Corp GmbH”, June 2021, Bundesfinanzhof, Case No I R 32/17

A German corporation,”G Corp” held interests in domestic and foreign companies in the year in dispute (2005). G Corp granted loans to various subordinate companies – resident in France and the USA. These loans were mainly at fixed interest rates; instead of a fixed interest rate, an annual participation of 12.5% in the balance sheet profit of the subordinate company, limited to a maximum amount of 25% of the loan volume, was agreed as consideration for one loan. No collateral was provided. In the year in dispute, G Corp wrote off these loans against taxable profits. G Corp also transferred assets at book value to a Maltese subsidiary company, of which it was the sole shareholder, and contributed the shares in this company, pursuant to section 23(4) of the Reorganisation Tax Act applicable in the year in dispute, also at book value, to another Malta-based company in the context of a capital increase against the granting of company rights. Finally, ... Read more
Germany vs Cash Pool GmbH, January 2018, BFH Case No. I R 74-15

Germany vs Cash Pool GmbH, January 2018, BFH Case No. I R 74-15

The German court concludes that a Cash Pool agreement must be clear and unambiguous both in substance and amount. If only a minimum and maximum interest rate has been agreed the arm’s length standard is not met. Click here for English translation Click here for other translation BUNDESFINANZHOF Urteil vom 17-1-2018 I R 74-15 ... Read more
Germany vs C-GmbH, December 2014, Bundesfinanzhof, Case No I R 23/13

Germany vs C-GmbH, December 2014, Bundesfinanzhof, Case No I R 23/13

C-GmbH was the sole shareholder of I-GmbH. In 2000, I-GmbH, together with another company, set up a US company for the development of the US market, H-Inc., in which the I-GmbH held 60 per cent of the shares. H-Inc. received equity from the two shareholders and also received a bank loan of approx. $ 1.5 million (USD), which the shareholders secured through guarantees. As of December 31, 2003, the balance sheet of H-Inc. showed a deficit not covered by equity of approx. 950,000 USD. On June 30 , 2004,  I-GmbH became the sole shareholder of H-Inc. Then the bank put the H-Inc. granted loans due. Since H-Inc. was not able to serve the bank loan, C-GmbH paid the bank. As of December 31, 2004, the balance sheet of H-Inc. showed a deficit not covered by equity of approx. $ 450,000 , which at December 31 , 2005 amounted to approx. $ 1.6 million, as at 31 December 2006 $ 2.5 million ... Read more
Korea vs Defence Corp, March 2006, Supreme Court, Case No 2004두4239

Korea vs Defence Corp, March 2006, Supreme Court, Case No 2004두4239

In this case the Korean Supreme Court concluded that the tax authorities had used transactions with different terms and conditions to price the controlled transactions. According to Article 5 (1) of the National Development and Reform Act in Korea, the TNM method can be applied only when the normal price can not be calculated by a conventional transfer pricing method, e.g. due to lack of comparable transactions. In addition, there was no proper way to adjust for the significant differences between the controlled transaction and transaction. Taxation based on the conventional transfer pricing methods may later be performed by the tax referee or the court. In fact, some cases have admitted the unlawfulness of tax disposition on the grounds of unreasonable selection of comparable transactions or lack of rational adjustment. However, if the tax assesssment is canceled in court, there will be cases where the taxation can no longer be carried out due to statues of limitations. Click here for ... Read more