Tag: Time-barred

Spain vs Varian Medical Systems Iberica S.L., October 2021, Audiencia Nacional, Case No SAN 4241/2021 - ECLI:ES:AN:2021:4241

Spain vs Varian Medical Systems Iberica S.L., October 2021, Audiencia Nacional, Case No SAN 4241/2021 – ECLI:ES:AN:2021:4241

Varian Medical Systems Iberica S.L. is the Spanish subsidiary of the multinational company Varian Medical Systems and carries out two types of activities – distribution and after-sales services. The products sold was purchased from related entities: Varian Medical Systems Inc., Varian Medical Systems UK Ltd., Varian Medical Systems International AG and Varian Medical Systems HAAN GmbH. The remuneration of Varian Medical Systems Iberica S.L. had been determined by application of the net margin method for all transactions and resulted in a operating margin of 2.86% in 2005 and 2.75% in 2006. In 2010 an audit were performed by the tax authorities for FY 2005 and 2006, which resulted in an adjustment. The tax authorities accepted the net margin method, but made various corrections in its application. The adjustments made by the tax authorities resulted in a operating margin of 6.45% in the two years under review, The tax administration argued that the margins determined by Varian Medical Systems Iberica S.L ... Read more
Canada vs Amdocs CMS Inc., July 2021, Federal Court, Case No 2021 FC 707

Canada vs Amdocs CMS Inc., July 2021, Federal Court, Case No 2021 FC 707

An employee (tax manager) of Amdocs Inc did not cooperate with the Canada Revenue Agency during several audits of the company and did not inform his superior about the audits. The audits resulted in tax reassessments for FY 2012 – 2014. The reassessment concerning FY 2012 resulted in income tax payable by $3,353,906, but by the time the employee informed his superior of the reassessment in 2019, Amdocs was time barred from objecting by virtue of the limitation periods. With respect to the assessments for FY 2013 and 2014 the limitation period for objections had not yet elapsed. Amdocs Inc filed an appeal with the court in regards of the denied access to object on the assessment for FY 2012. Judgement of the Federal Court The court dismissed the appeal of Amdocs and decided in favor of the tax authorities. Excerpts “…I find the Minister’s decision is reasonable. The Minister’s decision is internally coherent and justified in relation to the ... Read more
Russia vs PJSC Vimpelcom-Communications, May 2021, Arbitration Court of Moscow, Case No. A40-36350/21-140-1024

Russia vs PJSC Vimpelcom-Communications, May 2021, Arbitration Court of Moscow, Case No. A40-36350/21-140-1024

PJSC Vimpelcom-Communications submitted to the tax authority a revised notice of controlled transactions for 2017, under which contract numbers for 68 transactions were adjusted, including an agreement with a foreign counterparty Veon Wholensale Services B.V. (Netherlands) for the provision of agency-services (the “Controlled Transactions”), and information was also provided on another transaction with another foreign counterparty. Based on the revised notification, the Russian Tax Authorities issued a decision on 29 December 2020 to conduct an audit with respect to pricing of the Company’s Controlled Transactions for 2017. The Company held that the tax authority’s decision as unlawful. The Company insisted that the Russian Tax Authorities had missed the two-year deadline for issuing a decision on the appointment of an audit, and therefore lost its right to conduct a price audit in respect of the 2017-transactions in question. Judgement of the Arbitration Court The court dismissed the complaint and decided in favor of the tax authorities. The court concluded that the ... Read more
Switzerland vs "Contractual Seller SA", January 2021, Federal Supreme Court, Case No 2C_498/2020

Switzerland vs “Contractual Seller SA”, January 2021, Federal Supreme Court, Case No 2C_498/2020

C. SA provides “services, in particular in the areas of communication, management, accounting, management and budget control, sales development monitoring and employee training for the group to which it belongs, active in particular in the field of “F”. C. SA is part of an international group of companies, G. group, whose ultimate owner is A. The G group includes H. Ltd, based in the British Virgin Islands, I. Ltd, based in Guernsey and J. Ltd, also based in Guernsey. In 2005, K. was a director of C. SA. On December 21 and December 31, 2004, an exclusive agreement for distribution of “F” was entered into between L. Ltd, on the one hand, and C. SA , H. Ltd and J. Ltd, on the other hand. Under the terms of this distribution agreement, L. Ltd. undertook to supply “F” to the three companies as of January 1, 2005 and for a period of at least ten years, in return for payment ... Read more
Romania vs Lender A. SA, December 2020, Supreme Court, Case No 6512/2020

Romania vs Lender A. SA, December 2020, Supreme Court, Case No 6512/2020

In this case, A. S.A. had granted interest free loans to an affiliate company – Poiana Ciucas S.A. The tax authorities issued an assessment of non-realised income from loans granted. The tax authorities established that the average interest rates charged for comparable loans granted by credit institutions in Romania ranged from 5.45% to 19.39%. The court of first instance decided in favor of the tax authorities. An appeal against this decision was lodged by S S.A. According to S S.A. “The legal act concluded between the two companies should have been regarded as a contribution to the share capital of Poiana Ciucaș S.A. However, even if it were considered that a genuine loan contract (with 0% interest) had been concluded, it cannot be held that the company lacked the capacity to conclude such an act, since, even if the purpose of any company is to make a profit, the interdependence of economic operations requires a distinction to be made between ... Read more
Switzerland vs "Contractual Seller SA", May 2020, Federal Administrative Court, Case No A-2286/2017

Switzerland vs “Contractual Seller SA”, May 2020, Federal Administrative Court, Case No A-2286/2017

C. SA provides “services, in particular in the areas of communication, management, accounting, management and budget control, sales development monitoring and employee training for the group to which it belongs, active in particular in the field of “F”. C. SA is part of an international group of companies, G. group, whose ultimate owner is A. The G group includes H. Ltd, based in the British Virgin Islands, I. Ltd, based in Guernsey and J. Ltd, also based in Guernsey. In 2005, K. was a director of C. SA. On December 21 and December 31, 2004, an exclusive agreement for distribution of “F” was entered into between L. Ltd, on the one hand, and C. SA , H. Ltd and J. Ltd, on the other hand. Under the terms of this distribution agreement, L. Ltd. undertook to supply “F” to the three companies as of January 1, 2005 and for a period of at least ten years, in return for payment ... Read more
Greece vs "O.P.A.P. PROVISION OF SERVICES S.A.", February 2020, Supreme Administrative Court, Case No A 320/2020

Greece vs “O.P.A.P. PROVISION OF SERVICES S.A.”, February 2020, Supreme Administrative Court, Case No A 320/2020

The tax authorities had issued a TP adjustment for FY 2013 later than 18 month after initiating an audit of “O.P.A.P. PROVISION OF SERVICES S.A.” “O.P.A.P. PROVISION OF SERVICES S.A.” disagreed with legal basis for the assessment and filed an appeal. Judgement of the Supreme Court The Supreme Court allowed the appeal of “O.P.A.P. PROVISION OF SERVICES S.A.” and dismissed the assessment issued by the tax authorities. Since, the tax authorities had not carried out and completed its own tax audit within 18 months, these cases were considered definitively closed and time-barred after the 18-month period has passed. In other words, for these cases, the limitation period of the State’s audit right is 18 months and not five years. According to the Supreme Court, a re-inspection could only be carried out after the 18-month period, but within the normal five-year limitation if serious offenses were found concerning money laundering from criminal activities or transactions with non-existent tax companies or issuing ... Read more
Malaysia vs Shell Timur Sdn Bhd, June 2019, High Court, Case No BA-25-81-12/2018

Malaysia vs Shell Timur Sdn Bhd, June 2019, High Court, Case No BA-25-81-12/2018

In FY 2005 Shell Timur Sdn Bhd in Malaysia had sold its economic rights in trademarks to a group company, Shell Brands International AG. The sum (RM257,200,000.00) had not been included in the taxable income, but had – according to Shell – been treated as a capital receipt which is not taxable. The tax authorities conducted a transfer pricing audit beginning in June 2015 and which was finalized in 2018. Following the audit an assessment was issued where the gain had been added to the taxable income of Shell Timur Sdn Bhd. According to the tax authorities they were allowed to issue the assessment after the statutory 5-year time-bar in cases of fraud, wilful default or negligence of a taxpayer. An application for leave was filed by Shell. Courts decision The Court dismissed the application. Excerpt “I am, by the doctrine of stare decisis, bound by these pronouncements of the Court of Appeal and Federal Court. Hence, it is crystal ... Read more