In the case of Vansthal France the tax authorities had disallowed a transfer pricing policy under which a 20%-40% mark-up was added to payments to a Swiss entity because in its capacity as a billing centre the Swiss entity assumed no risk. Judgement of the Court The Court ruled in favour of the tax authorities. Excerpt “Considering, on the other hand, that it results from the investigation that the MAD company re-invoiced the goods to the VANSTHAL FRANCE company after having increased the prices by 39% for the kitchen articles and 20% for the porcelain articles and collected the corresponding payments; that, since MAD did not perform any services for the applicant company, the department considered that the latter had performed an abnormal act of management by agreeing to pay for its purchases at an unreasonably high price with full knowledge of the facts and that the payment of the excess price resulted in a transfer of profits abroad to the Nyder group, on which the applicant is dependent; Considering that if the applicant company maintains that the over-invoicing was justified by the services rendered by the company VANSTHAL INTERNATIONAL in the field of management and accounting, it was up to the latter to invoice these ‘services’ and not to the company MAD whose link with the company Z… INTERNATIONAL is solely financial; that the production of the MAD company’s operating account by the applicant company, in the absence of any official Swiss supporting document, does not have any evidential force to enable the value of the services that the MAD company allegedly rendered to the applicant to be assessed; that since the concept of ‘goodwill’ is an element used to calculate the value of the securities representing the share capital of limited companies, the relationship between the acquisition of shares in the company Nyder B. V. and the mark-ups on the price of goods charged by MAD is not established; that, consequently, the applicant company does not justify the existence of a consideration for the mark-ups on the prices invoiced by the Swiss company MAD; Considering that it follows from all the above that SARL Z… FRANCE is not entitled to maintain that it was wrongly that, by the contested judgment, the administrative court of Lille rejected its request; Article 1: The request of SARL Z.. FRANCE is rejected.” Click here for English translation Click here for other translation ...