CFE Tax Advisers Europe welcomes the requirement that Member States have to grant taxpayers the opportunity to provide evidence “of any commercial justification” for non-arm’s length transactions, with the result that a denial of that opportunity through automatic transfer pricing adjustments would render these incompatible with EU Law. In that context, it is further welcomed that “commercial justifications” may include “economic reasons resulting from its position as a shareholder of the non-resident company”. The Hornbach decision, at least in cases of non-arm’s length transactions, such as interest-free loans or gratuitous guarantees aimed at replacing equity, clearly suggests that such a shareholder interest in the financial success of the foreign subsidiary may serve as such justification.
|Number of pages||446|
|Publication status||Published - 2019|