The case examined EET Group’s taxable income from 2010 to 2012, focusing on revenue from goods sold to seven sales subsidiaries.
Denmark’s Supreme Court issued a ruling on the arm’s length pricing of transactions between the Danish EET Group and its sales companies in Norway and Spain on 21 May 2025.
The case focused on evaluating EET Group’s taxable income for the years 2010 to 2012, specifically concerning revenue generated from the sale of goods to seven of the group’s sales subsidiaries.
EET Group A/S purchases IT components and spare parts from independent suppliers and resells them to the group’s sales companies, which are established in several European countries. The sales companies are free to purchase products from EET Group or external suppliers; however, they mainly sell goods purchased from EET Group. However, the sales companies in Norway and Spain also bought products from external suppliers to a significant extent.
EET Group sells its products to sales companies at a price determined by the purchase price plus various amounts, including freight and storage costs. All sales companies pay the same price for a particular product.
The tax authorities had increased EET Group’s taxable income for the income years 2010-2012. The National Tax Court had subsequently repealed the increase for the income year 2010, but reduced the increases for the income years 2011 and 2012.
For the Supreme Court, the primary question was whether EET Group’s transfer pricing documentation regarding the sales companies in Norway and Spain was deficient and whether the tax authorities were consequently entitled to increase EET Group’s taxable income by an estimate in respect of income from sales of goods to these two companies.
The Supreme Court found that there was no basis to determine that the documentation was significantly deficient.
The second question was whether the Ministry of Taxation had proven that EET Group’s trade with the sales companies had not taken place at arm’s length, and whether SKAT’s (Danish tax agency) income increases were justified.
On this issue, the Supreme Court stated, among other things, that whether the Ministry of Taxation had discharged the burden of proof must depend on a regular assessment of the evidence in the case. The evaluation must be made in light of the company’s activities and other relevant circumstances.
The Supreme Court found that the fact that the margins of a number of the EET sales companies were outside the interquartile range (the middle 50%) of the margins of the comparator companies was not in itself sufficient to demonstrate that the EET Group and the sales companies had not acted at arm’s length.
The Supreme Court further stated that the calculations of interquartile ranges were only to a limited extent suitable for elucidating whether there had been no arm’s length trading in the present case, as information was only available on a relatively limited number of comparator companies.
Subsequently, and following an overall assessment, the Supreme Court decided that the Ministry of Taxation had failed to prove that EET Group had not acted reasonably with its sales companies.
As a result, the Supreme Court acquitted EET Group, aligning with the conclusion previously reached by the High Court.
