Eaton is an Ohio corporation with a global presence. It manufactures a wide range of electrical and industrial products. During the relevant period—2005 and 2006—Eaton had its foreign subsidiaries in Puerto Rico and the Dominican Republic manufacture certain products which Eaton then sold to its other affiliates and third-party customers. In 2002, Eaton applied for an APA related to these transactions. In 2004 the IRS and Eaton entered into the first APA which covered tax years 2001 through 2005. And in 2006 a second APA was entered which covered tax years 2006 through 2010. A few years after entering in to the APAs, Eaton reviewed its records and caught some inadvertent calculation errors. After letting the IRS know, Eaton corrected the mistakes. But the IRS thought that Eaton’s mistakes were serious enough to warrant its unilateral cancellation of the APAs for tax years 2005 and 2006. And after cancelling the APAs, the IRS handed Eaton a notice claiming a deficiency of tens of millions of dollars. Eaton filed a petition in the Tax Court, challenging the deficiency notice and the IRS’s cancellation of the APAs. The Tax Court sided with Eaton on the major issues, concluding that the IRS had wrongfully cancelled the APAs. However, the Tax Court also concluded that Eaton’s self-corrections didn’t constitute § 482 adjustments, and denied relief from double taxation. It reasoned that relief under Revenue Procedure 99-32 applies to § 482 adjustments only. An appeal was filed by the tax authorities – and a cross appeal by Eaton – with the Sixth Circuit (US Court of Appeal). Judgement of the Court The Court sided with Eaton on all issues presented, including Eaton’s claim for relief form double taxation. The Court held that (1) the IRS had the burden of proving that there were grounds to cancel the APAs under generally applicable contract-law principles and failed to meet that burden, and (2) the IRS could not impose IRC Section 6662 penalties on Eaton Corporation’s self-reported adjustments, and (3) that Eaton was eligible to claim relief from double taxation ...

In 2012, Flir Commercial Systems AB sold intangible assets from a branch in Belgium and subsequently claimed a tax relief of more than SEK 2 billion in fictitious Belgian tax due to the sale. The Swedish Tax Agency decided not to allow relief for the Belgian “tax”, and issued a tax assessment where the relief of approximately SEK 2 billion was denied and a surcharge of approximately SEK 800 million was added. The Administrative Court concluded that the Swedish Tax Agency was correct in not allowing relief for the fictitious Belgian tax. A double taxation agreement applies between Sweden and Belgium. In the opinion of the Administrative Court, the agreement prevents Belgium from taxing the assets. Consequently, any fictitious tax cannot be deducted. The Administrative Court also considers that the Swedish Tax Agency was correct in imposing a tax surcharge and that there is no reason to reduce the surcharge. The company’s appeal is therefore rejected. Click here for translation ...

The question at issue was whether a tax adviser had acted in accordance with the requirements of a reasonably competent and reasonably acting adviser when advising on the so-called royalty routing and its implementation and when giving advice on trading. Click here for other translation ...

TeleTech Canada Inc.  is seeking judicial review of what it says is the continuing refusal of the Canada Revenue Agency to provide it with relief from double taxation, allegedly in breach of the CRA’s obligations under articles IX and XXVI of the Convention between Canada and the United States of America with respect to Taxes on Income and on Capital, 26 September 1980, Can. T.S.  1984 No. 15, as implemented by the Canada-United States Tax Convention Act, 1984, S.C. 1984, c. 20. In its application, TeleTech Canada seeks an order of mandamus compelling the CRA to accept its application for competent authority consideration and to provide the company with relief from double taxation under Article IX of the Treaty by submitting the matter to binding arbitration, pursuant to the provisions of Article XXVI of the Treaty. The Court concluded that there has been no “continuing refusal” on the part of the CRA. Rather, two discrete decisions were made by the CRA in relation to TeleTech Canada’s requests for relief from double-taxation, neither of which has been directly challenged by the company.  I have further concluded that TeleTech Canada has not established that it is entitled to an order of mandamus, with the result that the application will be dismissed ...