Eni Norge AS was a wholly owned subsidiary of Eni International B.V., a Dutch company. Both companies were part of the Eni Group, in which the Italian company Eni S.p.A was the HQ. Eni Norway had deducted costs related to the purchase of “technical services” from Eni S.p.A. Following an audit, the tax authorities reduced these deductions pursuant to section 13-1 of the Taxation Act (arm’s length provision). This meant that Eni Norway’s income was increased by NOK 32,673,457 in FY 2015 and NOK 16,752,728 in FY 2016. The tax assessment issued by the tax authorities was later confirmed by a decision of the Petroleum Tax Appeal Board. The Appeals Board considered that there were price deviations between the intra-group hourly rates for technical services and the external hourly rates. The price deviations could be due to errors in the cost base and/or a lack of arm’s length in the distribution of costs. There was thus a discretionary right pursuant to section 13-1, first paragraph, of the Tax Act. Eni Norge A/S applied to the District Court for a review of the decision refering to a previous judgement from the Norwegian Supreme Court HR-2020-1130-A (the Shell R&D judgement). Judgement of the District Court The court did not find that the decision of the Appeals Board was based on incorrect facts or application of the law and upheld the decision. Excerpts “The Supreme Court held that the correct approach was to base the assessment on what was actually the cost burden for Norske Shell. Costs covered by others should not be included (paragraph 57). The Court cannot see that this judgement provides guidance for our case, because it concerns a different fact. The Supreme Court assumed that it concerned a case with an agreed cost contribution scheme: 51-52: (51) In the legislative proposal in connection with the addition of section 13-1 fourth paragraph of the Tax Act in 2007, Proposition No. 62 (2006-2007), the Ministry reviewed the content of the OECD Transfer Pricing Guidelines. Section 5.9 of the proposal provides an account of the guidelines relating to cost contribution arrangements (CCA) – referred to in the guidelines as Cost Contribution Arrangements (CCA). The content of such arrangements is described as follows: “A CCA is a contractual framework for sharing the costs and risks associated with the development, production or acquisition of assets, services or rights. The participants seek to obtain an expected benefit through their contributions to the KBO. Under a KBO, each participant will have the right to utilise its interests in the KBO as the actual owner of these, and the participants will thus not be liable to pay royalties or other remuneration to any other party for the utilisation of their interests in the arrangement. The most common KBOs are arrangements for joint development of intangible assets, but KBOs are also established for other purposes.” In my view, it is in good accordance with the arm’s length principle that follows from Section 13-1 of the Tax Act and the OECD Guidelines, when the Complaints Board in its decision has assumed that the relationship between Norske Shell and the group companies involves a cost-sharing arrangement. In this case, there is no transfer of assets for a consideration to be determined on the basis of the commercial principles that would apply to an ordinary sale of goods, services or rights.” The situation in our case concerns a case that the Supreme Court has limited itself to, namely the purchase of services between mother and daughter, which must be considered a transfer of assets for consideration. An ordinary sale has taken place. The service agreement and the individual sales do not involve a cost contribution scheme. Nor did the agreement state that revenues were to be deducted in a cost sharing arrangement, as was the situation in the Shell R&D judgement. The fact that the accounting agreement contains provisions on cost allocation between the licence partners does not change the facts. It concerns the sale of services between two independent parties, Eni S.p.A and Eni Norge. In the assessment, the income shall be determined as if the community of interest had not existed, cf. section 13-1, third paragraph, of the Tax Act. The Court agrees with the reasoning of the majority of the Appeals Board: “In the assessment, the income shall be determined as if the community of interest had not existed, cf. section 13-1 third paragraph of the Tax Act. § Section 13-1, third paragraph. If independent parties would have viewed the transactions in context, it is natural to do so also in controlled transactions. An independent service provider in a similar arrangement would naturally demand payment for all the services provided, regardless of whether the service recipient is subsequently re-invoiced or reimbursed for the costs of some of the services by others. An independent service recipient in such an arrangement would also accept to pay for all the services, but no more than what similar services would cost in the open market. This must also apply to the services that Eni Norge can charge the licence partners under the accounting agreement.” Without it being of decisive importance for the Court’s assessment, the Plaintiff has not been as clear in the administrative proceedings that there is a pure passing on of the service costs to the licence partners as it was during the main hearing. The Court refers to this description by the majority of the Board of Appeal of the charge: (…) As the Court understands the Plaintiff’s response during the proceedings, it confirms that there is not full correspondence between the costs from the purchase of the service from Eni S.p.A and the onward charge. The Plaintiff has at best been very unclear on this point. This supports the Court’s assessment that the transactions must be assessed separately. As stated, this is not decisive for the Court’s conclusion. The Court has no need to problematise the principle that it can only rely on the facts presented by the ...