Tag: Dell

Spain vs Dell, June 2016, Supreme Court, Case No. 1475/2016

Dell Spain is part of a multinational group (Dell) that manufactures and sells computers. Dell Ireland, operates as distribution hub for most of Europe. Dell Ireland has appointed related entities to operate as its commissionaires in several countries; Dell Spain and Dell France are part of this commissionaire network. The group operates through a direct sales model and sales to private customers in Spain are conducted by Dell France, through a call centre and a web page. Dell Spain use to operate as a full-fledged distributor, but after entering into a commissionaire agreement Dell Spain now served large customers on behalf of Dell Ireland. A tax assessment was issued by the tax authorities. According to the assessment the activities in Spain constituted a Permanent Establishment of Dell Ireland to which profits had to allocated for FY 2001-2003. Judgement of the Supreme Court The Supreme Court concludes that the activities of Dell Spain constitutes a Permanent Establishment of Dell Ireland under both the “dependent agent†and “fixed place of business†clauses of the treaty. The expression “acting on behalf of an enterprise†included in article 5.5 of the Spain-Ireland tax treaty does not necessarily require a direct representation between the principal and the commissionaire, but rather refers to the ability of the commissionaire to bind the principal with the third party even when there is no legal agreement between the latter two. Furthermore, the Supreme Court considers that Dell Spain cannot be deemed as an independent agent since it operated exclusively for Dell Ireland under control and instructions from the same. Regarding the “fixed place of businessâ€, the Supreme Court states that having a place at the principal’s disposal also includes the use of such premises through another entity which carries out the principal’s activity under its supervision. This Court also explained that considering a company as a PE is not only based on its capacity to conclude contracts that bind the company but also on the functional and factual correlation between the agent and the company in the sense that the agent has sufficient authority to bind the company in its day to day business, following the instructions of the company and under its control. In regards to question of Employee stock option expences,  the Court partially upheld the claim of Dell and stated “”expenses that are correlated with income” are deductible expenses. Consequently, any expense correlated with income is an accounting expense, and if any accounting expense is a deductible expense in companies, with no exceptions other than those provided for by law” Click here for English translation Click here for other translation Spain-vs-Dell-20-june-2016-Supreme-Court-case-nr-2861-2016 ...

Norge vs. Dell Norge. December 2011, HRD saknr 2011-755

The Irish company Dell Products was taxable in Norway for years 2003-2006. The issue was whether Dell Products had a permenent establishment in Norway, cf. Article 5. 5 in the tax treaty between Ireland and Norway from 2000. Dell Products sold PC’s and equipment by a commission agreement in which the Irish company was Principal and the Norwegian company Dell AS was commissioner. Both the companies are part of the Dell group. Dell AS sold to customers who were large enterprises and the public sector. It was not disputed that the agreement was not legally binding on Dell Products in relation to customers. Dell Products would have a permanent establishment in Norway and may be taxable Norway, if Dell Norway had acted “on behalf of” and had the “authority to conclude contracts on behalf of the” Dell, ref. Tax Treaty Article 5. 5. Unlike the District Court and the Court of Appeal the Supreme Court did not wote in favor of the tax authorities. The wording of the article strongly support that the commissioner must bind the principal in relation to the customer. The article is identical to the OECD Model Convention, and it had the same weight that also the commentary for this support a requirement for judicial bond. Also other legal sources pointed in the same conclusion. When both the wording and other legal sources support this condition, Article 5. 5 cannot lead to an anna result. The Supreme Court came to the conclusion that Dell Products did not have a permanent establishment in Norway. Click here for translation Norway Dell-Norge-2011-december-HRD-saknr2011-755 ...