Piaggio S.A. was a Greek wholesaler of motorcycles, mopeds, parts, and accessories. In 2008, the company generated gross revenue of €63.63 million and net profit of €878,666, while purchases from related parties, such as Piaggio and Moto Guzzi, totalled €57.99 million. In order to support the pricing of its controlled transactions, the company filed a benchmark study with eight foreign comparables and a tested operating margin of 1.78 per cent, which it claimed fell within an interquartile range of 0.92 to 3.96 per cent.
Following an audit, the tax authorities removed two comparables for being uncomparable in size, recalculating the range to 0.78–7.16 per cent, with the first quartile at 1.81 per cent and the median at 3.81 per cent. They then raised the income by moving the tested result to the median and added a penalty for non-compliance.
Piaggio S.A. filed an appeal, which was dismissed by the lower court, and an appeal was then filed with the Supreme Administrative Court.
Judgment:
The Supreme Administrative Court allowed the appeal and set aside both the adjustment and the penalty.
The court held that, for 2008, Article 39 of the ITC created a rebuttable presumption, rather than mandating any specific documentation or pricing method. The legal framework in Law 3728/2008 and Ministerial Decision A2-8092, issued at the end of December 2008, could not be applied as a binding tax method for that year. Instead, deviation had to be proven on the basis of all relevant information, not just the arm’s length principle or the three-year reference period set out in that framework.
As the appellate court treated this framework as determinative and upheld the median adjustment and penalty on this basis, its judgment was erroneous.
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