Tag: Transfer pricing methods

Korean vs Guarantee fees Corp, October 2015, Korean Court, Case No 2014구합65806

Korean vs Guarantee fees Corp, October 2015, Korean Court, Case No 2014구합65806

Up until 2015 it had been the practice of the Korean tax authorities to issue tax assessments to Korean parent companies for providing guarantees to foreign subsidiaries without receiving appropriate arm’s-length guarantee fees. To that end, the Korean tax authorities had developed a credit assessment model. In this case the court ruled on the appropriatenes of this model. The court decided that the model was inappropriate due to: (1) Availability of the data used (2) Usage of domestic corporate bankruptcy rate (3) Disregard of industry-specific and non-financial information, implied warranties and local factors. Click here for translation Korea vs Guarantee fee corp 21 October 2015 ... Continue to full case
Switzerland vs. Corp, Jan. 2015, Case No. 2C_1082-2013, 2C_1083-2013

Switzerland vs. Corp, Jan. 2015, Case No. 2C_1082-2013, 2C_1083-2013

In this case, the Swiss Court elaborates on application of the arm’s length principel, transfer pricing methods, OECD TPG, and the burden of proof in Switzerland. Excerp in English (unofficial translation) “5.1. The question of whether there is a disproportion between the service provided by the company and the compensation it provides is determined by comparison with what has been agreed between independent persons (“Drittvergleich”): the question is whether the benefit would have been granted, to the same extent, to a third party outside the company, or to check whether the “arm’s length” was respected. This method makes it possible to identify the market value of the property transferred or the service rendered, with which the counter-benefit actually required must be compared. 5.2. Where there is a free market, the prices charged therein are decisive and allow an effective comparison with those applied in the transaction examined. If there is no free market, but transactions with the same characteristics have ... Continue to full case