Tag: Trademark license agreement

Ghana vs Beiersdorf Gh. Ltd, August 2018, High Court, Case No CM/TAX/0001/2018

Ghana vs Beiersdorf Gh. Ltd, August 2018, High Court, Case No CM/TAX/0001/2018

Beiersdorf Gh. Ltd. imports and distributes Nivea skin care products from the parent company based in Germany, Beiersdorf AG). The tax authorities, CGRA, had issued an assessment where deductions for royalty payments to the German parent had been denied (non recognition – not legitimate business cost). Furthermore, alledged product discounts paid to third party vendors  had been characterized as sales commissions subject to withholding tax of 10%. Beiersdorf contended the assessment and filed an appeal. The appeal was based on three main grounds: The finding of CGRA that royalty payments made by the Appellant to Beiersdorf AG (BDF) pursuant to an agreement between Appellant and BDF for the use of the Nivea brand should not be allowed as a legitimate business cost because of the failure of the Appellant to comply with prior registration of the Royalty Agreement with the Ghana Investment Promotion Center is wrong in law. The finding of CGRA imposing liabilities with respect to withholding tax is wrong ... Continue to full case

France vs IKEA, May 2017, CAA of Versailles, No 15VE00571

The French tax authorities had issued an assessment for the fiscal years 2002, 2003 and 2004 related to royalty fees paid by IKEA France to foreign group companies. It was claimed that the royalty fees paid were exessive. The Court reject the position of the authorities. It had not been proven that the fees paid by IKEA France to foreign IKEA companies were excessive based on the arm’s length principle and on Article 57 of the CGI. The Court stresses the irrelevance of the comparables presented by the administration: “Considering that the nine trademarks used as comparables by the administration relate to the French market, the furniture sector and distribution methods similar to that of Ikea; that, however, as the company Ikea Holding France argues, the Minister does not give any precise indication on the content of the services rendered to the franchisees of these trademarks in return for their royalty; these trademarks are notoriously inferior to Ikea’s and they ... Continue to full case
India vs. Maruti Suzuki India Ltd.

India vs. Maruti Suzuki India Ltd.

Maruti Suzuki India manufactures and sells cars and spare parts. A license agreement had been entered with the group parent for use of licensed information and trademark for the manufacture and sale of the products. Hence, Maruti Suzuki paid royalties to the parent for trademark and technology. The tax administration made an adjustment where the royalty paid for use of the trademark was disallowed and where a reimbursement with mark-up for non-routine advertising, marketing and promotion of the brand name was imputed. The High Court, referred the case back to the tax administration with observations. If there is an agreement between the group parent and the taxpayer which carries an obligation on the taxpayer to use the trademark owned by the group parent. Such agreement should be accompanied either by an appropriate payment by the group parent or by a discount provided to the taxpayer. Appropriate payment should be made on account of benefit derived by the group parent in the form of marketing intangibles obtained from such mandatory ... Continue to full case
South Africa vs. BP Southern Africa (Pty) Ltd, March 2007, Supreme Court of Appeal, Case No 60 / 06, 2007-07

South Africa vs. BP Southern Africa (Pty) Ltd, March 2007, Supreme Court of Appeal, Case No 60 / 06, 2007-07

the Supreme Court of Appeal held that royalty payments are tax deductible in terms of s 11(a) of the Income Tax Act. It accordingly upheld an appeal by BP Southern Africa (Pty) Ltd against a judgment of the Income Tax Special Court. During 1997 BP Southern Africa (Pty) Ltd concluded a written trade mark licence agreement with its parent company BP plc in terms whereof it was granted authorisation to use and display the licensed marks and licensed marketing indicia of the latter against payment of royalties. For the tax years 1997, 1998 and 1999 the royalty fee payments were respectively R 40.190.000, R 45.150.000 and R 42.519.000. BP Southern Africa (Pty) Ltd subsequently claimed those payments as deductions in terms of section 11(a) of the Income Tax Act 58 of 1962 in the determination of its taxable income. The South African Revenue Services disallowed those deductions. BP Southern Africa (Pty) Ltd’s objection to the disallowance was overruled by the ... Continue to full case