The French Supreme Court issued a decision on 4 April 2018, concluding that a permanent establishment (PE) existed in France for purposes of determining nonresident companies’ exposure to French VAT in a case involving a transport commissionaire arrangement. The decisions clarify the criteria for determining whether a service provider will be considered to have sufficient substance in France to enable the services to be performed in an independent manner, and thus constitute a PE. A UK sea carriage commissionaire signed a client assignment contract with a French company carrying out the same activity, as well as a contract for the French company to organize and provide transport services. The UK company was required to approve any new clients or suppliers. The UK company also managed the reservation systems for clients to book the transport and communicated with the clients regarding the transport and the insurance linked to the business. The French company was responsible for the overall development of the ... Read more

US Court of Appeal had to decide whether the controlled prices determined by US Steel was in accordance with the arm’s length principle, or rather what kind of evidence was sufficient for a taxpayer to challenge successfully the Commissioner’s determination that payments between a parent and a subsidiary are not “arm’s length” and thus are subject to reallocation under § 482 of the Internal Revenue Code. The appeal before the Court of Appeal related to a decision issued by the Tax Court in 1977 where it had been concluded that a § 482 reallocation of profits issued by the tax authorities was justified because US Steel had caused a related party – Navios – to charge rates such that, at all times, the delivered price of Orinoco-origin iron ore in the United States was equivalent of the Lower Lake Erie price. In the Tax Court’s view, this equivalence served several purposes. First, it protected US Steel’s interest in the revenues ... Read more

The US tax authorities had issued an assessment on the basis of transfer prices as determined by US Steel was not considered in accordance with the arm’s length principle and thus subject to reallocation under § 482 of the Internal Revenue Code. Judgement of the Court The Tax Court concluded that the assessment issued by the tax authorities was justified because US Steel had caused a related party – Navios – to charge rates such that, at all times, the delivered price of Orinoco-origin iron ore in the United States was equivalent of the Lower Lake Erie price. In the Tax Court’s view, this equivalence served several purposes. First, it protected US Steel’s interest in the revenues of its subsidiary, Oliver Mining Co., by insuring that the Lower Lake Erie price was not undercut by cheaper foreign ore. Second, because US Steel could be sure of selling its Orinoco production so long as the delivered United States price did not ... Read more