Court cases

Jurisdiction United States, Tax Court and Seventh Circuit Summary of Facts Abbott Labs challenges IRS regulations requiring cost-sharing arrangements and service charges to include stock-based compensation costs. This case is a continuation of disputes seen in Altera and Xilinx. Key Issues The validity of regulations mandating the inclusion of stock-based compensation in cost bases for […]

Jurisdiction United States, Tax Court and Eighth Circuit Summary of Facts The case involves the concept of “blocked income,” where Brazilian law capped royalty rates on IP licenses between a local subsidiary and its foreign parent. The IRS reallocated income despite these legal restrictions. Key Issues Whether the IRS can reallocate income classified as blocked

Jurisdiction United States, Tax Court and Eighth Circuit Summary of Facts Medtronic’s case revolves around determining the appropriate arm’s-length royalty for the U.S. subsidiary’s license of intellectual property (IP) necessary to manufacture implantable medical devices. The dispute primarily concerns the best transfer pricing method to use. Key Issues The IRS favors the Transactional Net Margin

Jurisdiction Sweden, County Administrative Court of Gothenburg Summary of Facts This case involved the deductibility of a license fee paid by a Swedish company (AB) to a Maltese group company (Corp) for the use of a trademark. The Swedish Tax Agency (STA) argued that Corp, despite being the legal owner of the trademark, did not

Jurisdiction European Union, Court of Justice of the European Union (CJEU) Summary of Facts The CJEU annulled the European Commission’s decision that Volotea and easyJet received illegal state aid through Italian regional law funding. Key Issues Whether the state aid given to airlines for air route development constituted an unfair advantage. Decision and Reasoning The

Jurisdiction Norway, Court of Appeal Summary of Facts The case involved a loan agreement between ConocoPhillips Norway and its subsidiary, with the tax authority challenging the interest rate as not being at arm’s length. Key Issues Whether the interest rate on the loan followed the arm’s length principle. Decision and Reasoning The court ruled in

Jurisdiction India, Income Tax Appellate Tribunal (ITAT) Summary of Facts Olympus Medical Systems India faced a transfer pricing audit due to financial losses, with the tax authority demanding audited financials of affiliated entities and using the residual profit split method. Key Issues The appropriateness of the residual profit split method and the requirement for audited

Jurisdiction India, Income Tax Appellate Tribunal (ITAT) Summary of Facts The ITAT ruled in favor of Kellogg India, which had used the AE as the tested party for benchmarking the import of Pringles products, despite the tax authorities’ preference for the Indian entity as the tested party. Key Issues The appropriateness of the transactional net

Jurisdiction United Kingdom, Upper Tribunal (UT) Summary of Facts HMRC disputed BlackRock’s inter-company loan arrangements following its acquisition of Barclays Global Investors, challenging the arm’s length nature of the loan interest rates. Key Issues Whether the interest rates on inter-company loans were compliant with the arm’s length principle. Decision and Reasoning The UT ruled in

Jurisdiction France, French Tax Authority (le fisc) Summary of Facts ST Dupont faced pricing adjustments following an audit, with allegations that the prices at which it sold merchandise to its Hong Kong subsidiary were below the arm’s length level. Key Issues The investigation focused on whether the royalty rates and transfer prices between ST Dupont

Jurisdiction France, French Tax Authority (le fisc) Summary of Facts McDonald’s agreed to pay €1.25 billion ($1.31 billion) following an investigation into its transfer pricing arrangements, marking one of the largest tax settlements in French history. Key Issues The investigation revealed that McDonald’s shifted profits abroad through increased royalties, avoiding substantial tax payments in France.

Jurisdiction European Union, Court of Justice of the European Union (CJEU) Summary of Facts The European Commission concluded that Luxembourg provided illegal state aid to Fiat Chrysler Finance Europe by approving an advance transfer pricing arrangement that did not comply with the arm’s length principle. Key Issues The case focused on whether the Commission’s interpretation

Jurisdiction Australia, Australian Taxation Office (ATO) Summary of Facts Rio Tinto agreed to pay A$613 million ($424 million) to the ATO following allegations of profit-shifting to its Singapore marketing center. This settlement is in addition to an already paid A$378 million, totaling nearly A$1 billion in tax. Key Issues The case focused on whether Rio

Jurisdiction Denmark, Danish Tax Agency (SKAT) Summary of Facts Maersk Oil and Gas faced allegations of using an aggressive transfer pricing arrangement to report losses despite high profitability. The dispute involved a know-how license agreement with subsidiaries in Algeria and Qatar, where the parent company received a 1.7% royalty rate. Key Issues The main issue