Prinoth S.p.A. is an Italian manufacturer of snow groomers and tracked vehicles. For a number of years the parent company had been suffering losses while the distribution subsidiaries in the group had substantial profits. Following an audit the tax authorities concluded that the transfer prices applied between the parent company and the distributors in the group had been incorrect. An assessment was issued where the transfer pricing method applied by the group (cost +) was rejected and replaced with a CUP/RPM approach based on the pricing applied when selling to independent distributors. An appeal was filed by Prinoth S.p.A. which was rejected by the Court of first instance. The Court considered “the assessment based on the price comparison method to be well-founded, from which it emerged that in the three-year period from 2006 to 2008 the company had sold to its subsidiaries with a constant mark-up of 11.11 per cent, while in direct sales to end customers it had applied a mark-up of 32 per cent and in sales to dealers a mark-up of 25 per cent, 22 per cent and 20 per cent in the various years, and pointed out that these prices were perfectly comparable, since the products were of the same type, under conditions of free competition and at the same marketing stage; pointed out that the resale price criterion also corroborated these results as well as the profit comparison method, finding that Prinoth, in the years from 2007 to 2011, had suffered losses of approximately €4 million while the subsidiaries had made profits of approximately €20 million, which was not consistent with the choices of an independent operator Finally, the Court did not accept Prinoth’s defence that, due to the particular nature of the products and the marketing methods used, the only appropriate method was the cost-plus method, which was accepted by the first judges but not accepted because it led to completely different results, due to the erroneous data used, because in the master files and local files made available by Prinoth, the costs not relating to production were arbitrarily allocated. These considerations led it to conclude that the company had not met its burden of proof.” Prinoth S.p.A then filed an appeal with the Supreme Administrative Court. Judgement of the Court The Supreme Administrative Court found the reasoning of the regional court lacking and remanded the case back to the Court in a different composition. Excerpt “5. On the other hand, the second and third pleas, to be dealt with together, are well founded. In fact, the aforementioned ruling is entirely anapodic, failing to explain in any way the reasons why the numerous and unambiguous factual elements, represented by the taxpayer company and already relied on in the judgments at first instance, have no impact on the concrete possibility of referring to them for the purpose of identifying the normal value in accordance with the criterion of the price comparison method, being instead potentially capable of affecting the actual comparability of the transactions. The company had in fact deduced, in support of the unusability of the price comparison criterion, and on the basis of its own use of the different cost-plus criterion, that in the intra-group transfers Prinoth did not carry out all the marketing, sales and after-sales activities, as well as after-sales assistance, entrusted to the subsidiaries; and, secondly, that of the risks, that in the intra-group transfers the subsidiaries took upon themselves the risks of inventory, fluctuations in the costs of raw materials and interest rates. Well, the judge cannot, when examining the arguments of the parties or the facts of evidence, limit himself to stating the judgement in which their assessment consists, because this is the only “static” content of the complex motivational statement, but he must also engage, all the more so in a complex case, in the description of the cognitive process through which he passed from his situation of initial ignorance of the facts to the final situation constituted by the judgement, which represents the necessary “dynamic” content of the statement itself (Cass. 20/12/2018, no. 32980; Cass. 29/07/2016, no. 15964; Cass. 23/01/2006, no. 1236). And such an anapodic and generic statement also results in a violation of the OECD Guidelines that allow the application of the price comparison method only in the presence of effectively comparable transactions, otherwise the necessary adjustments must be made. And for the purposes of the comparability of transactions, as seen above, the functions performed by the undertakings and the allocation of risks between the contractual parties play a decisive role, together with the identity of the product, which are capable of affecting the price of the transaction. The second and third pleas must therefore be upheld.” Click here for English translation Click here for other translation ...

In February 2016 the Regional Tax Commission rejected an appeal filed by the Revenue Agency against the first instance judgment, which had upheld an appeal brought by Italian car manufacturer, Ferrari S.p.A. against a notice of assessment issued by the Revenue Agency in which the company was accused of having applied prices lower than the ‘normal value’ in transactions with its foreign subsidiaries, in particular with the US company Ferrari NA (North America). In determining the arm’s length price of the relevant controlled transactions Ferrari had applied the CUP method. The Revenue Agency considered the TNMM to be the most appropriate method. The Regional Tax Commission observed that “for verifying the “normal value”, the Revenue Agency itself, in Circular No. 32 of 22/09/1980, had suggested the use of the CUP method instead of the less reliable TNMM method “which is not advisable due to its considerable approximation and arbitrariness’ for which reason the Office’s objection must be considered inadmissible”. On that basis the Regional Tax Commission determined that the CUP method should be applied in the case. Furthermore, the Regional Tax Commission found that the Revenue Agency had not discharged the burden of proof of tax avoidance attributed to the appellant company, for having charged prices to foreign subsidiaries that were lower than the normal value. An appeal was filed by the Revenue Agency with the Supreme Court. Judgement of the Supreme Court The Supreme Court set aside the decision of the Regional Tax Commission and upheld the Revenue Agency’s adjustments to the taxable profits of Ferrari Spa. According to the Court a transfer pricing adjustments does not require the Revenue Agency to prove the existence of tax avoidance, as stated by the Regional Tax Commission, but rather the mere existence of ‘transactions’ between related companies at a price apparently lower than the normal one. The taxpayer, by virtue of the principle of proximity of evidence, bears the burden of proving that such “transactions” took place in accordance with the arm’s length principle. Excerpts “8.5.2. In this, the contested decision ignored the fact that the development of the jurisprudence of this Court, already at the time of the issuance of the judgment rendered by the CTR, had abandoned the consideration of the nature of Article 110, paragraph 7, TUIR, as an anti-avoidance clause (see Cass. sez. 5, 18 September 2015, no. 18392; hereinafter see also Cass. sez. 5, 15 April 2016, no. 7493; Cass. sez. 5, 30 June 2016, no. 13387; Court of Cassation, section 5, 15 November 2017, no. 27018; Court of Cassation, section 5, 19 April 2018, no. 9673; most recently, while awaiting the publication of this decision, Court of Cassation, section 5, 17 May 2022, no. 15668), which leads to the further principle, affirmed by the case law of this Court, according to which “[i]n the matter of determining business income, the rules set forth in Article 110, paragraph 7, Presidential Decree no. 917 of 1986, aimed at taxing the income of a company, are not applicable to the taxable person. 917 of 1986, aimed at repressing the economic phenomenon of “transfer pricing”, i.e. the shifting of taxable income as a result of transactions between companies belonging to the same group and subject to different national laws, does not require the administration to prove the avoidance function, but only the existence of “transactions” between related companies at a price apparently lower than the normal price, while it is for the taxpayer, by virtue of the principle of proximity of proof under Article 2697 e.g. and on the subject of tax deductions, the burden of proving that such ‘transactions’ took place for market values to be considered normal within the meaning of Art. 9, paragraph 3, of the same decree, such being the prices of goods and services practiced in conditions of free competition, at the same stage of marketing, at the time and place where the goods and services were purchased or rendered and, failing that, at the nearest time and place and with reference, as far as possible, to price lists and rates in use, therefore not excluding the usability of other means of proof” (cf, more recently, Cass. sez. 5, orci. 19 May 2021, no. 13571 and already, in a conforming sense, Cass. sez. 5, 8 May 2013, no. 10742). 8.5.3. It should also be noted, in relation to the concluding passage of the grounds of the contested judgment, how the same Tax Administration had already specified in Circular No. 42/IIDD/1981 that the adequacy of a transfer pricing method must be assessed on a case-by-case basis. 8.6. In conclusion, it should be recalled how the aforementioned Court of Cassation No. 15668/2022, with specific reference to the Transactional Net Margin Method or TNMM, in referring to Section B of Part III of Chapter II of the OECD Guidelines of 2010 which regulates it, as well as, similarly, the subsequent edition of 2017, had the opportunity to affirm the principle, which must be given further continuity herein, according to which “[i]n the matter of determining business income, the rules under Article 110, paragraph 7, of Presidential Decree No. 917 of 1986, aimed at determining the transfer price of a company, are not applicable to the transfer pricing method. 917 of 1986, aimed at repressing the economic phenomenon of “transfer pricing”, i.e., the shifting of taxable income following transactions between companies belonging to the same group and subject to different national regulations, requires the determination of the weighted transfer prices for similar transactions carried out by companies competing on the market, for which purpose it is possible to use the method developed by the OECD that is based on the determination of the net margin of the transaction (so-called “TNM”), which is the basis for the determination of the net margin of the transaction. “TNMM”), provided that the period of investigation is selected, the comparable companies are identified, the appropriate accounting adjustments are made to the financial statements of the tested party, due account is taken of the ...

Enoplastic SpA is engaged in production of closures for vine, spirits, oil and vinegars. Following an audit an assessment was issued by the tax authorities regarding transfer pricing. An appeal was filed by Enoplastic and the Regional Court later set aside the assessment stating that the tax authorities had not proved the existence of a tax advantage nor that the pricing determined by Enoplastic had not been at arm’s length. An appeal was then filed by the tax authorities claiming that the burden of proof was on Enoplastic due to the principle of proximity of evidence and that transfer pricing adjustments was not premised on proof of an intention to obtain tax savings. Judgement of the Supreme Court The Supreme Court upheld the decision to set aside the tax assessment. However, the basis on which the decision of Regional Court had been issued was incorrect. According to the Supreme Court transfer pricing adjustments should not be confused with tax fraud or avoidance, even if transfer pricing may be used for such purposes. Thus, transfer pricing adjustments is not premised on the tax authorities proving that a tax advantage has been archived by the incorrect pricing. The tax authorities must prove the existence of economic transactions between controlled parties at a price that appears to deviate from the normal price. Only where such evidence has been provided by the tax authorities will the burden of proof shift to the taxpayer who will then have to prove that the transaction has been priced in accordance with the arm’s length principle. Judgement of the Court The Supreme Administrative Court Click here for English translation Click here for other translation ...

The regional court had set aside an assessment issued by the tax authorities concerning controlled transaction between P.V. s.r.l. and related parties. An appeal was filed by the tax authorities with the Supreme Administrative Court. Judgement of the Court The Supreme Administrative Court set aside the decision of regional court and referred the case back to the regional court in a different composition. Excerpts “Equally well-founded are the fourth and fifth pleas, which can be dealt with together because, under the different headings of infringement of the law and defective reasoning, they focus on the same issue, namely on the fact that the judgment of the regional court wrongly ruled out that the transactions involving the sale of goods by the taxpayer to foreign companies controlled by it could be classified as transfer pricing, instead framing them as part of a tax planning programme. The Office had identified two anomalies in the aforesaid transactions, namely the application of prices lower than average prices and the excessive deferment of payments, which occurred not only with significant delays, but without the payment of interest. This led the Agency to consider that the transfer price deviated from the normal value, thus fulfilling the hypothesis provided for by TUIR, Article 110, paragraph 7, for the existence of which the appellant would have fulfilled its burden of proof, while it was up to the taxpayer to provide suitable reasons to justify the commercial anomalies found. On this issue, the judgment under appeal stated that “the documentation produced shows that there was no transfer pricing but rather that the company was pursuing a tax planning programme. Moreover, the Office does not provide any evidence of the assumptions of the alleged avoidance, such as the more favourable taxation in Germany, Belgium, England and the United States, countries in which the non-Italian resident companies operated, compared to the Italian taxation system, and the undue tax advantage obtained by applying prices lower than market prices in transactions with foreign subsidiaries, in the absence of valid economic reasons’. Well, apart from the absence of specific arguments on which to base the conviction that the transactions for the sale of the assets were part of a tax planning programme rather than transfer pricing, the regional court did not take into account that the case law of the Court has long held that on the subject of the determination of business income, the legislation, already provided for by Presidential Decree No. 917 of 1986, Article 76, paragraph 5, and now by Article. 110(7), does not constitute an anti-avoidance regulation in the strict sense, but is aimed at repressing the economic phenomenon of transfer pricing (understood as the shifting of taxable income following transactions between companies belonging to the same group and subject to different national laws) in itself considered, so that the proof incumbent on the tax authorities does not concern the higher national taxation or the actual tax advantage obtained by the taxpayer, but only the existence of transactions, between related companies, at a price apparently lower than the normal price, it being instead incumbent on the taxpayer, in accordance with the ordinary rules of proximity of proof pursuant to Article 2697 of the Civil Code and on the subject of tax deductions, the taxpayer has the burden of proving that such transactions took place for market values to be considered normal in accordance with the specific provisions of TUIR, art. 9, paragraph 3 (Cass, judgment no. 10742/2013; judgment no. 18392/2015; ord. no. 9673/2018). The judgment under appeal ruled without taking into account these principles, and moreover without providing answers to the points raised punctually in the Office’s notice of appeal, as reported in the appeal for cassation. The fourth and fifth grounds of appeal must therefore also be upheld.” Click here for English translation Click here for other translation ...

Sogefi Filtration S.p.A. received a notice of assessment for the 2003 financial year concerning various issues, including the deduction of royalties paid for the use of a trademark, interest income on a loan granted to a foreign subsidiary and the denial of a tax credit for dividends received by a French subsidiary. Sogefi appealed to the Regional Court, which ruled largely in its favour. Not satisfied with the decision, the tax authorities appealed to the Supreme Court. Judgement of the Supreme Court On the issue of transfer pricing the Supreme Court clarified, that the French arm’s length provision is not an anti-avoidance rule. Excerpt “4.1. The plea – admissible as it does not concern questions of merit but the correct application of the rule – is well founded. 4.2. It should be noted, in fact, that Art. 76 (now 110) tuir does not incorporate an anti-avoidance regulation in the strict sense, but is aimed at repressing the economic phenomenon of transfer pricing (shifting of taxable income following transactions between companies belonging to the same group and subject to different national regulations) considered in itself, so that the proof incumbent on the tax authorities does not concern the higher national taxation or the actual tax advantage obtained by the taxpayer, but only the existence of transactions, between related companies, at a price apparently lower than the normal price, it being incumbent on the taxpayer, pursuant to the ordinary rules of proximity of proof under Art. 2697 et.e. and on the subject of tax deductions, the taxpayer bears the burden of proving that such transactions took place for market values to be considered normal in accordance with the specific provisions of Article 9(3) of the Income Tax Code (see Court of Cassation no. 11949 of 2012; Court of Cassation no. 10742 of 2013; Court of Cassation no. 18392 of 2015; Court of Cassation no. 7493 of 2016). Such conclusion, moreover, is in line with the ratio of the legislation that is to be found “in the arm’s length principle set forth in Article 9 of the OECD Model Convention””, so that the assessment on the basis of the normal value concerns the “economic substance of the transaction” that is to be compared “with similar transactions carried out under comparable circumstances in free market conditions between independent parties” (see. in particular, Court of Cassation No. 27018 of 15/11/2017 which, in recomposing the different interpretative options that have emerged in the Court’s case law, expressly stated “the ratio of the rules set forth in Article 11O, paragraph 7, of the Income Tax Code must be identified in the arm’s length principle, excluding any qualification of the same as an anti-avoidance rule”). Incidentally, it should be noted that the current OECD Guidelines, in terms not dissimilar from what has been provided for since the 1970s, are unequivocal in clarifying (Chapter VII of the 2010 Guidelines, paras. 7.14 and 7.15 with respect to the identification and remuneration of financing as intra-group services, as well as 7. 19, 7.29 and 7.31 with respect to the determination of the payment), that the remuneration of an intra-group loan must, as a rule, take place through the payment of an interest rate corresponding to that which would be expected between independent companies in comparable circumstances. 4.3. However, in the case in point, the CTR excluded the application of the institute on the assumption that “a more favourable interest rate granted to a subsidiary for the acquisition of a company operating in the same sector in Spain is not necessarily of an avoidance nature” and, therefore, although faced with the objective fact of the divergence from the normal value, it excluded its relevance on the basis of an irrelevant assumption extraneous to the provision, the application of which it misapplied, resulting, in part, in the cassation of the judgment.” Click here for English translation Click here for other translation ...

Haier Europe Trading Srl, an Italien subsidiary of the Chinese Haier group (active within home appliances and consumer electronics), challenged an assessment for FY 2007, with which the tax authorities had recovered for taxation the difference with respect to the normal value in relation to transactions of goods with other companies of the group not resident in Italy. An appeal was filed by Haier with the Tax commission which was considered well-founded. The tax authorities then filed an appeal with the Supreme Administrative Court. Judgement of the Supreme Administrative Court The Court found that the appeal in regards of transfer pricing was well founded and set aside the Judgement of the Tax Commission. Excerpt “3.2 Now, in the case at hand, the CTR affirms that “in the case at hand, as demonstrated, the prices paid are correct and in line with (i.e. lower than) those of the domestic market”. This ruling, moreover, is followed by the observation that the payment of monetary contributions (for € 11,612,189.50) by the Chinese parent company “as a partial adjustment of the transfer prices” was functional “to support its economic results and ensure that the profitability of the taxpayer company corresponds to that of the market”. In other words, on the one hand an apparent congruence of the transfer prices with market values seems to be affirmed – and therefore with an asserted “normal” value, a value which, moreover, is related to purchases from the subsidiary alone on the domestic market and not in free market conditions between independent parties – while on the other hand the achievement of a profitability corresponding to that of the market requires a substantial monetary contribution by the parent company, the allocation and purpose of which remains unclear in practice. 3.3. It follows, therefore, that the appellate court, in assessing the congruity of the transfers, i.e. whether they took place at a normal price, did not take into account that the alleged normality did not take place in a condition of competitiveness and in the absence of any adequate corrective and applied, in reality, a criterion of normalisation “a posteriori”, having considered the price “normal” not because it complied with the criteria of the law but because it was supplemented, subsequently, by the parent company. It must be reiterated, moreover, that it is settled case law that “the ‘normal value’ of the consideration, in transactions between companies belonging to the same multinational group, pursuant to Article 76 (now 110) of Presidential Decree No. 917 of 22 December 1986, must be inferred from the “normal value” of the consideration of the transaction. 917, must be deduced from a comparison that is highly contextualised in qualitative, commercial, temporal and local terms, aimed at identifying an average value from which only the destabilising factor of non-competitiveness must be expunged, so that the price lists or tariffs of the entity that provided the goods or services constitute the priority criteria, and in the absence thereof, the price lists or tariffs of the chambers of commerce and the professional tariffs, taking into account customary discounts, or, in the case of imposed prices, the measures in force, and, finally, in the absence of such elements, the objectively significant and numerically appreciable data, which it is the taxpayer’s burden to attach” (Cass. No. 17953 of 19/10/2012). 3.4. The CTR, therefore, erred in applying Article 110, Paragraph 7, tuir and the criteria set forth in Article 9, Paragraph 3, tuir, as it was totally incomprehensible whether or not the value of the transactions corresponded to the normal value.” Click here for English translation Click here for other translation ...

I. S.p.A. had received a tax assessment in which the tax authorities had corrected various items, including the inclusion of interest on an intra-group loan and the disallowance of tax deductions for the cost of intra-group services. The Provincial Tax Commission had cancelled the assessment, but following an appeal by the tax authorities, the Regional Court partially confirmed the assessment. Judgement of the Supreme Court The Supreme Court set aside the judgement of the Regional Court and refered the case back to the Court, in a different composition. Excerpts Controlled transactions “Correctly, therefore, the CTR has independently appreciated the notion of parent (or subsidiary) company provided for by the tax law. This solution is also consistent with the provisions of the OECD Transfer Pricing Guidelines of 1995 (but also with the previous and subsequent ones), which inspire the national regulations, which are not binding but relevant in terms of interpretation (Article 9 of the OECD Model, in particular, takes into consideration – and derives consequences in terms of the taxation of profits – the case in which the relationship is between two (associated) companies and the constraint derives from conditions accepted or imposed that differ from those that would have been agreed upon by independent companies). Nor should it be misleading that the CTR used the term “dominant influence”, which already existed in the previous text of Article 75, paragraph 4, of Presidential Decree No. 597 of 1973, since it is a formula suitable for describing the content of direct or indirect control, as set forth in Article 76, paragraph 5, (now 110) TUIR. 6.2. The CTR adequately motivated the belief expressed as to the existence, in this case, of a situation of control in light of the fact that the president and director of the K. Group, “to which K. M. KG, purchaser of the medical equipment, belongs … “possesses … a non-majority but slightly minority shareholding, equal to 45% of the shares of the company I., however, he has a dominant influence in the ordinary shareholders’ meeting in that the shareholding he holds exceeds the sum of the shares held by the three Italian partners (15% V. L., 20% V. A., 5% Z. C.)” and that furthermore “he is in any case able to exercise a dominant influence on the company I. thanks to the “strategic” role of “Sales and marketing” manager that he holds within” the company itself.” The arm’s length principle in regards to interest-free loans “10.2. To this second approach the court, also with a view to overcoming the conflict, considers to adhere. In fact, it is of paramount importance to identify the actual ratio of the institution, which is to be found in the arm’s length principle, set forth in Article 9 of the OECD Model Convention, the consideration of which cannot but be unitary regardless of the nature of the transaction, so that international non-interest-bearing loans between subsidiaries/parent companies are also included in the rules under review in view of the need to objectify the value of the transactions for tax purposes only. A number of reasons militate in support of this conclusion: – Article 110(7) of the Income Tax Code is a special rule with respect to the provisions concerning the determination of capital income: the special feature is the circumstance that one of the two parties (belonging to the same corporate group) involved in the financing transaction is based outside the territory of the State; hence, Article 45(2) of the Income Tax Code is inapplicable and any non-performance clauses cannot be relied on for tax purposes; – the connotation of the restrictive character of the freedom of negotiation attributed to the transfer pricing discipline is irrelevant; the ratio of the discipline aims at replacing the subjective value of the transaction with the objective and normalised value, so that it covers every managerial act potentially capable of inducing an increase or decrease in taxable income regardless of the legal structure of the relationships between the parties, whether onerous or free of charge; – there is no need for a restrictive interpretation: the phrase ‘components of income arising from transactions’ refers not only to actual but also to those that are generated even only potentially; – the current OECD Guidelines, while not re-proposing the specific indications already present in the 1979 version (which affirmed the general rule that the disbursement of a loan should always be followed by the charging of interest where, in the same circumstances, this would have been agreed upon by independent third parties), are unambiguous in clarifying (Chapter VII of the 2010 Guidelines, paras. 7.14 and 7.15 with respect to the identification and remuneration of financing as intra-group services, as well as 7.19, 7.29 and 7.31 with respect to the determination of the payment), that the remuneration of an intra-group financing must, as a rule, take place through the payment of an interest rate corresponding to that which would have been expected between independent companies in comparable circumstances. Such an arrangement also appears to be compatible with the principles of EU law in relation to the need to protect the balanced allocation of taxing power between Member States (see Court of Justice, judgment of 21 January 2010, Société de Gestión Industrie/le SA, in C-311/08, in relation to gratuitous benefits (“extraordinary and without consideration”) granted by a resident company to a company established in another Member State).” Click here for English translation Click here for other translation ...

Judgement on application of the Polish arm’s length provisions in Article 11 of the Corporate Income Tax Act. Excerpts from the Supreme Court Judgement “The provisions of Articles 11(3) and 11(4) of the Corporate Income Tax Act do not introduce a requirement for the tax authority to prove the fault (collusion) of the seller and the buyer of goods consisting in deliberate under- or overpricing in order to achieve favourable tax consequences. The extraordinary revision’s suggestions that the establishment of the relationship referred to in Article 11(4) of that law, without the simultaneous establishment of intentional conduct, is insufficient for the application of assessed prices to the contractor, as they are contrary to the linguistic (basic) interpretation of that provision, are erroneous. Also, the claim in the extraordinary revision that it is up to the court to prove that the relationship set out in sections 11(3) and 11(4) of the said law influenced the determination of lower prices is not justified. This allegation demonstrates an erroneous understanding of the role of the court. Evidence is presented by the parties to the trial and the court evaluates it. The court does not prove anything, but only assesses the credibility of the evidence taken at the request of the parties or exceptionally ex officio. The procedural rules have not been violated either (and certainly no gross violation of them can be alleged). The Supreme Administrative Court adequately explained the facts (Articles 7 and 77 § 1 of the Code of Administrative Procedure in conjunction with Article 59 of the Act on the Supreme Administrative Court) without violating the principle of free – but not arbitrary – assessment of evidence (Article 80 of the Code of Administrative Procedure in conjunction with Article 59 of the Act on the Supreme Administrative Court). It has not been demonstrated by the applicant that there were economic grounds for applying in the transactions between it and “O.” significantly lower prices than to other counterparties of “O.”. There was no successful challenge in the extraordinary revision to the view taken in the contested judgment that, in relation to the applicant, “O.” determined prices with the assumption of a profit of approximately 5%, while with regard to other customers a profit of several tens of percent was assumed, reaching up to nearly 80%. Courts – as well as administrative authorities – assess evidence according to the principles of life experience. These principles indicate that sufficient evidence regarding the circumstances constituting the basis for the application of Article 11(3) and (4) of the Corporate Income Tax Act is the use by “O.” significantly lower profit rates, and also – and perhaps above all – the application of this practice to the future purchaser of the “O.” company, and, moreover, that both entities had two of the same persons on the board of directors. “ Click here for English Translation Click here for other translation ...