Following a tax audit, the tax authorities concluded that the most appropriate method for determining Olympex’s income was the Transactional Net Margin Method (TNMM). However, in addition to the search criteria used by Olympex, the tax authorities added geographical and company size criteria. This resulted in higher margins for the comparables in the benchmark and an assessment of additional taxable income was made on this basis.
Olympex disagreed with the assessment and appealed. The District Court upheld the appeal and quashed the assessment.
The tax authorities appealed to the Court of Appeal, which in part overturned the decision of the District Court. Both parties then appealed to the Supreme Court, which remitted the case to the Court of Appeal for reconsideration.
After re-examining the case, the Court of Appeal found largely in favour of Olympex, and the tax authorities then appealed to the Supreme Court.
Final Judgment
The Supreme Court upheld the decision of the Court of Appeal and dismissed the appeal of the tax authorities.
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