Denmark vs. Corp, March 2017, Tax Tribunal, SKM2017.187

Category: Intangibles - Goodwill Know-how Patents, Transfer Pricing Documentation, Transfer Pricing Methods | Tag: , ,
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The Danish Tax administration had made an estimated assessment due to a insufficient TP documentation. In the assessment goodwill amortizations were included when comparing the operating income of the company to that of independent parties in a database survey.

The Tax Tribunal found that the tax administration was not entitled to make an estimated assessment under Article 3B (3) of the current Tax Control Act. 8 (now paragraph 9) and section 5 3, where the TP documentation provided a sufficient basis for assessing whether prices and terms were in accordance with the arm’s length principle.

According to the Tax Tribunal goodwill amortizations should not be included when comparing the operating income of the company to the operating income of independent parties in a database survey. Hence the assessment was reduced to DKK 0.

The case has been appealed to the Danish National Court by the tax authorities.

 

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SKM2017-187-LSR





Related Guidelines

  1. TPG2022 Chapter V paragraph 5.15It may often be the case that the documents and other information required for a transfer pricing audit will be in the possession of members of the MNE group other than the local affiliate under examination. Often the necessary documents will be located...
  2. TPG2022 Chapter V paragraph 5.43Another way for countries to encourage taxpayers to fulfil transfer pricing documentation requirements is by designing compliance incentives such as penalty protection or a shift in the burden of proof. Where the documentation meets the requirements and is timely submitted, the taxpayer could...
  3. TPG2022 Chapter V paragraph 5.13A third objective for transfer pricing documentation is to provide tax administrations with useful information to employ in conducting a thorough transfer pricing audit. Transfer pricing audit cases tend to be fact-intensive. They often involve difficult evaluations of the comparability of several transactions...
  4. TPG2022 Chapter V paragraph 5.3Since then, many jurisdictions have adopted transfer pricing documentation rules and the proliferation of these requirements, combined with a sharp increase in the volume and complexity of international intra- group trade and the heightened scrutiny of transfer pricing issues by tax administrations, has...
  5. TPG2022 Chapter V paragraph 5.2This chapter provides guidance for tax administrations to take into account in developing rules and/or procedures on documentation to be obtained from taxpayers in connection with a transfer pricing enquiry or risk assessment. It also provides guidance to assist taxpayers in identifying documentation...
  6. TPG2022 Chapter V paragraph 5.34For purposes of Annex III to Chapter V of these Guidelines, the Country-by-Country Report should include all tax jurisdictions in which the MNE group has an entity resident for tax purposes, regardless of the size of business operations in that tax jurisdiction....
  7. TPG2022 Chapter VIII paragraph 8.52The following information would be relevant and useful concerning the initial terms of the CCA: a) a list of participants b) a list of any other associated enterprises that will be involved with the CCA activity or that are expected to exploit or...
  8. TPG2022 Chapter V paragraph 5.37It is recommended that transfer pricing documentation be periodically reviewed in order to determine whether functional and economic analyses are still accurate and relevant and to confirm the validity of the applied transfer pricing methodology. In general, the master file, the local file...
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  2. A Toolkit on Implementation of Effective Transfer Pricing Documentation RequirementsThe Platform for Collaboration on Tax (IMF, OECD, UN and the WBG) has published a toolkit on implementation of effective transfer pricing documentation requirements.  ...

Related Case Law

  1. European Commission vs Spain, December 2016, European Court of Justice, Case C-20/15P, C-21/15PThe issue in these cases was tax provisions in Spain stipulating that, when a company in Spain acquires a share holding in a foreign company of at least 5%, goodwill resulting from that acquisition can be deducted for tax purposes through amortization (much...
  2. Denmark vs. Bombardier, October 2013, Administrative Tax Court, SKM2014.53.LSRThe issue in the case was whether the applicable rates under the cash pool arrangement were on arm’s length, i.e. in accordance with the transfer pricing requirements. The Administrative Tax Court upheld most of the conclusions of the tax authorities. First, the Court...
  3. Canada vs Bayer Inc. July 2020, Federal Court, T-272-19Bayer Inc, is a Canadian subsidiary of Bayer AG Germany. Bayer is a multinational group of companies in the pharmaceutical and life sciences industry . Since 2016, the Canada Revenue Agency has been auditing Bayer Inc. 2013-2015 taxation years. Between December 2017 and...
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