Armslængdeprincippet og skønsmæssig ansættelse

Abstract

The purpose of this thesis is to examine the interesting area of estimated assessment within transfer pricing. The Danish Tax Agency’ (DTA) use of estimated assessment in transfer pricing audits have been debated for years and several companies have had their taxable income adjusted by the DTA. The specific reasons for the increase of the companies’ taxable income have varied in the several cases where it has been evaluated whether the DTA was entitled to the make estimated assessments resulting in a increase of the companies’ taxable income. In order to investigate the DTA’s use of estimated assessment the legislation have initially been clarified to state the legislation in force at the time of the income years’ of the two Supreme Court rulings that was selected to be investigated in order to connect the theoretical part of the thesis with case law. The two principal rulings concern the multinational corporations Microsoft (U.2019.1446H) and Adecco (U.2020.3256.H) both pronounced by the Danish Supreme Court and both rulings were about the interpretation of the then current Tax Control Act’s (TTA) section 3B (8) with reference to section 5 (3),
which regulated estimated assessment of controlled transactions along with the arm’s length principle in TTA section 2 (1). At the time of the income years in question with respect to the two rulings, the DTA was entitled to make estimated assessments when the taxpayer had not prepared the transfer pricing documentation and when the transfer pricing documentation was insufficiently adequate to allow the DTA to examine whether the controlled transactions of the taxpayer was done at arm’s length. The Supreme Court held, that in order for the DTA to be allowed to make an estimated assessment, the taxpayer’s transfer pricing documentation must be inadequate to a degree comparable with no transfer pricing documentation at all, i.e. the submitted documentation must be wholly deficient. Furthermore, the Court held that the DTA cannot make an estimated assessment solely based on the transfer pricing documentation being late, i.e. the transfer pricing documentation was not completed by the due date for the annual tax return. In this regard, it was stated that the decisive time for determining whether the DTA can make an estimated assessment is the time of the assessment (“ansættelsestidspunktet). This means that the taxpayer should be afforded the chance to complete and submit documentation of its controlled
transaction upon request before the DTA can determine that the taxpayer’s documentation is wholly inadequate and make an estimate assessment of those controlled transaction.