References/18 Dec 2018

Borenius advised Paroc in a landmark transfer pricing case

We advised Paroc on a dispute regarding transfer pricing. The Supreme Administrative Court issued a precedent in this landmark case on 18 December 2018 (KHO 2018:173), highlighting the taxpayer’s right to choose its business model and the most appropriate transfer pricing method.

According to the precedent, the taxpayer’s corporate taxation could not be reassessed based on an assumed business model and by justifying the tax reassessment with other transfer pricing methods than those applied by the taxpayer. The Supreme Administrative Court confirmed the “as structured” principle that applies in Finnish transfer pricing.

In addition, the Supreme Administrative Court ruled that tax returns filed by the companies for the years in question cannot be treated as incorrect when it comes to the selection of the transfer pricing method when the selected methods could be justified by OECD Transfer Pricing Guidelines that were available when the tax returns were filed.

The ruling was not only favourable to the client but also important from the perspective of the principle of taxpayers’ freedom of choice.

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Einari Karhu




Sampo Viding

Senior Associate