The District Court of North Holland issued a judgment in a Transfer Pricing case in which NovioTax represented the taxpayer, defending the application of the Profit Split Method, allocating 70% of the residual profits to the Netherlands and 30% to the PE jurisdiction, against the cost-plus approach (TNMM with 15% mark-up on a restricted cost base) proposed by the Dutch tax authorities. The case demonstrates the importance of comprehensive transfer pricing documentation in dispute resolution.

Alongside the importance of a robust and meticulously documented TP-strategy, the case discussed in this blog highlights the need for a well-reasoned comparability analysis based on economically significant factors, rather than outcome-based screening of comparables. The decision of the court also highlights the relevance of carrying out a manual screening of the selected comparables, especially with respect to criteria such as independence (A+, A, A-).

This blog is Part 3 of a 3-part series analysing two Luxembourg cases related to (implicit) substance threshold for recognizing non-trading foreign branch offices as permanent establishments for availing exemptions from Luxembourg’s annual net wealth tax. This blog comprises our observations and key takeaways from the two cases discussed in Part 1 & 2.

In this two-part blog, we analyse a Czech transfer pricing case dealing with a loss-making contract manufacturer and the legal ownership of high-value materials on arm’s length remuneration. Part I comprises a detailed analysis of the case, along with key observations. Part II comprises a summary of the case, followed by a (theoretical) analysis of the allocation of burden-of-proof under Dutch law, i.e., as if the Czech case were a Dutch case.

This blog is Part 2 of a 3-part series analyzing two Luxembourg cases related to (implicit) substance threshold for recognizing non-trading foreign branch offices as permanent establishments for availing exemptions from Luxembourg’s annual net wealth tax. This blog outlines Case #2, concerning the recognition of a PE in the U.S., along with general observations and comments on the burden of proof.

In this two-part blog, we analyse a Czech transfer pricing case dealing with a loss-making contract manufacturer and the legal ownership of high-value materials on arm’s length remuneration. Part I comprises a detailed analysis of the case, along with key observations. Part II comprises a summary of the case, followed by a (theoretical) analysis of the allocation of burden-of-proof under Dutch law, i.e., as if the Czech case were a Dutch case.

This blog is Part 1 of a 3-part series analysing two Luxembourg cases related to (implicit) substance threshold for recognizing non-trading foreign branch offices as permanent establishments for availing exemptions from Luxembourg’s annual net wealth tax. This blog outlines Case #1, concerning the recognition of a PE in Malaysia, along with general observations and comments on the burden of proof.

This blog analyses a German court case wherein a U.K.-based aircraft-engineering company was held to have a permanent establishment at a German airport premises based on an employee of the U.K. company having had ‘at his disposal’ designated facilities for personal use (i.e., a locker in a common room at the airport premises) in connection with rendering aircraft maintenance services between 2008 and 2014.

The key dispute in the case arose from (i) a difference in accounting treatment (Colombian GAAP vs. IFRS/US GAAP) of reimbursements from a related party; (ii) selection of appropriate PLI. Relying on expert opinion , the court concluded that the comparability adjustments proposed by the taxpayer were reasonable and justified to achieve better comparability between the taxpayer and the comparable companies. By accepting the comparability adjustment, the court implicitly recognized that accounting classification (expense vs. capitalized; COGS vs. OPEX) can materially swing outcomes under an OPEX-based PLI (e.g., ROTC) and an asset-based PLI (e.g., ROCE).

This blog is the second of our two-part series calling attention to common red flags that stand out for tax authorities during audits. In these blogs, we share our experience with tax audits, specifically pointing out some pitfalls to watch out for while framing TP policies and compiling TP documentation. Our insights are meant to serve as a starting point for companies to assess and refine their approach to TP in order to be better prepared for audits and scrutiny.

This blog is the first of our two-part series calling attention to some easily avoidable perils we encounter in Transfer Pricing documentation. These items are also the “red flags” that stand out for tax authorities during audits. Though there is no such thing as a “bullet-proof TP strategy”, avoiding these red flags can alleviate some pressure from the audit procedure. In general, being prepared with the requisite documentation and engaging proactively with the tax authorities makes the process less stressful.

This blog is related to our previous blogs about the effective dividend withholding tax rate under the India-Netherlands DTAA. In this blog, we cover the latest update on this topic – an Indian Supreme Court ruling regarding the interpretation of Most Favoured Nation (‘MFN’) clauses in Indian tax treaties with various OECD member countries. This Indian ruling has caused quite a stir among companies invested in India, as it could lead to a flurry of tax and penalty demands from the Indian tax authorities.