In 2012, the tax authorities increased the taxable income for the income years 2006-2008 for two companies in the former A. P. Møller – Mærsk Group. P. Moller – Maersk Group. The taxable income was thus increased for the former Mærsk Olie og Gas A/S (MOGAS), which was taken over by Total S.A. in 2018, and for A.P. Møller – Mærsk A/S (APMM), which was the management company in the joint taxation with, among others, MOGAS. As grounds for the increases, the tax authorities referred to the fact that intra-group transactions had taken place between MOGAS and the company’s subsidiaries, Mærsk Olie Algeriet A/S and Maersk Oil Qatar A/S, which did not fulfil the tax legislation’s rules that transactions between group companies must be priced in accordance with what could have been achieved if the transactions had been concluded between independent parties (arm’s length terms). The assessment of additional income concerned three issues. Firstly, prior to the establishment of the ... Read more

A Danish parent in the Maersk group’s oil and gas segment, Maersk Oil and Gas A/S (Mogas), had operating losses for FY 1986 to 2010, although the combined segment was highly profitable. The reoccurring losses was explained by the tax authorities as being a result of the group’s transfer pricing setup. “Mogas and its subsidiaries and branches are covered by the definition of persons in Article 2(1) of the Tax Act, which concerns group companies and permanent establishments abroad, it being irrelevant whether the subsidiaries and branches form part of local joint ventures. Mogas bears the costs of exploration and studies into the possibility of obtaining mining licences. The expenditure is incurred in the course of the company’s business of exploring for oil and gas deposits. The company is entitled to deduct the costs in accordance with Section 8B(2) of the Danish Income Tax Act. Mogas is responsible for negotiating licences and the terms thereof and for bearing the costs ... Read more

BG Exploration and Production Ltd. had determined the remuneration for various services provided on an aggregated basis by applying the TNMM method using profit to sales as the Profit Level Indicator. The tax authorities found that a CUP method was the most appropriate method and that the various services provided should be priced separately. On that basis an assessment was issued. BG E&P filed a complaint and the Dispute Resolution Panel set aside the assessment. “Consequently, after verifying that assessee has demonstrated need for those services, benefit derived from those services, evidence of receipt of such services and submitting that those services are neither duplicative in nature and nor are share holder activities, the DRP directed the Ld. transfer pricing officer to delete the adjustment proposed with respect to the intragroup services of Rs. 3329766244/–, deserves to be upheld.” The tax authorities then filed an appeal with the Income Tax Tribunal. Judgement of the Tribunal. “The main issue under these ... Read more