Recently, the Supreme Administrative Court (SAC) held in judgment 7 Afs 398/2019 – 49 of a transfer pricing (TP) case that tax administrators may assess additional tax based on overall profitability not just for related-party transactions, but also for transactions with unrelated parties.
In this case, the court concluded that transactions with an independent party can also be considered controlled transactions if they are influenced by a related party. Such transactions do not need to be reviewed separately, but can be viewed on an aggregated basis.
Additionally, the court also ruled that when transactions with an independent party are identified that cannot be considered arm’s length the independent party must be compensated for risks that that independent party cannot control.
