The use of price quotes as economic references in transfer pricing analysis is disputed or unclear in many countries. The OECD Transfer Pricing Guidelines neither accept nor reject such references but instead state that in the chapter on intangibles that “[o]ffers to unrelated parties or genuine bids .... may also be taken into account”. The theoretical objection against using quotes is that they are not actual transactions as long as they are not accepted and therefore cannot qualify as comparable uncontrolled prices. Nevertheless, in the absence of other and better economic references, the issue of whether a quote can be used or not regularly appears in practice.
In
Denmark
two recent cases address directly or indirectly the use of quotes.
In the first case (SKM 2008.250 SR /
TfS
2008, 518), which is a decision of June
20 2006
but only published on March
25
2008, the use of a quote from a bank for an interest rate on a loan was rejected. Rather, the interest rate was determined with reference to the yield rate on Danish government bonds plus a margin for risks,
administration
and profit, resulting in a slightly higher interest rate than that supported by the quote. This case concerned a unilateral advance pricing agreement (APA). The decision does not state any reasons why the quote was not accepted.
The second case (SKM2008.171.SR /
TfS
2008, 599) of February
19 2008
concerned the application of the
thin-capitalisation
rules. In this
case
a taxpayer succeeded in convincing the tax authorities to apply the exception in the Corporate Income Tax Act, Section 11, 1, No 3, 4th sentence on the basis of a quote from a third-party bank. As the quote for a loan and interest rate was considered genuine, it was accepted as third-party reference material, and
consequently
no restriction on the deductibility of interest expenses on a related-party loan applied.
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