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Vanessa Ramos Ferrin

Court decision about exchange of information requests in a transfer pricing audit

By | Court cases update

On 16 December 2020, the Higher Administrative Court (“HAC”) ruled in favour of the Luxembourg Tax Authorities (“LTA”) in an appeal (N ° 45072) initiated by an Anonymous Company (“Luxembourg Company”), requesting an annulment of an information injunction arising from an exchange of information procedure between Luxembourg and Belgium.

The information injunction includes the request of information and documents of a related party in Belgium (“Belgium Company”) in connection with certain services received by the Luxembourg Company.

A. Background and facts

  • On 21 August 2020, the competent authority of the Belgian tax administration sent to the LTA a request for information of the Luxembourg Company under the tax convention between Luxembourg and Belgium.
  • On 7 September 2020, the director of the LTA addressed to the Luxembourg Company an information injunction to request different information and documents in connection with certain services received by the Luxembourg Company from the Belgium Company for the period from 1st January 2017 to 31st December 2019. In a nutshell, the request concerns to the employees, management, functions, contact details, facilities, and activities of the Belgium Company.
  • On 7 October 2020, the Luxembourg Company requested to the HAC the annulment of the information injunction by arguing among others a failure to state the reasons or motivation of the request and a violation of its rights of defense.
  • On 22 October 2020, the delegate of the LTA requested that the appeal should be dismissed. He refuted the arguments expressed by the Luxembourg Company and added among others the following:
    • Description of the circumstances provided and carried out by the Belgian tax administration during its investigation on Belgian territory. In brief, the description includes:
      • Background of the activities of the Group,
      • Re-invoicing of services with a low margin,
      • Nonalignment of functionalities described in the transfer pricing study (“first TP Study”) versus actual conduct of the parties, and
      • Discrepancies with regards to the invoices issued by the Belgium Company (containing fictitious invoices for purchase of products and provision of services).
    • The request should allow the Belgian tax administration to determine with precision the activities and functions carried out and the real profit of the companies, as well as the part of its taxable basis in Belgium.
  • On 9 November 2020, the Luxembourg Company filed an additional brief and added among others the following:
    • Failure by the Belgian tax authorities to have exhausted all the internal means of investigation, including the obtention of an updated version of the transfer pricing study (“second TP Study”) and other documents justifying the adoption of its transfer pricing policy.
    • Reliance on an opinion drawn up by an independent auditor according to which the transfer pricing policy applied by the group would comply with the TP Study.
    • The perception of a low margin could be explained by the fact that Belgium Company would have been qualified as a tested party with limited functions and risks.
    • Allegation that the activities and functions were carried out by the Belgium Company would be described in the said second TP Study.
  • On 23 November 2020, the delegate of the LTA filed an additional brief for adding among others:
    • the request would indicate that the competent authority of Belgium had exhausted its usual sources of information.
    • the role of the Luxembourg authorities would be limited to verifying the consistency of all the explanations presented by the requesting authority based on its request.
    • The purpose of the request would be to verify whether:
      • the activities of the Belgium Company were carried out, organized, diligent, and monitored from the Luxembourg Company during the period concerned and
      • the profits of the Belgium Company should, at least partially, be reallocated either in the accounts of the said Company or taxed in a permanent establishment in Belgium for the period concerned.

B. The Court’s decision

On 16 December 2020, the HAC concluded that the appeal is dismissed due to lack of foundation. Therefore, the HAC rejected it and ruled the following:

  • Failure to state reasons for the information injunction must be rejected to be unfounded.
  • The information injunction is based on a sufficiently reasoned request from the Belgian tax administration, it must therefore be considered having been validly issued with regard to the Luxembourg Company.

 C. Takeaways

  • Action for annulment of an injunction decision requires careful consideration and precaution.
  • Transfer pricing audits continue to be one of the drivers of international cooperation between tax authorities via exchange of information procedures.
  • The information requested via the injunction allows us to have a view on the recent trends of transfer pricing audits of intercompany services. The request confirms the importance of:
  • Verifying the economic rationality of the transactions,
  • Checking the alignment of functionalities expressed in transfer pricing documentation with the actual conduct of the related parties.
  • Confirming that the arm’s length remuneration is in accordance with the actual conduct of the related parties.
  • Validating the proper application of the transfer pricing policy within the Group.
  • Ensuring that the provision of information during a transfer pricing audit is carefully managed in each jurisdiction. It would allow to limit risk exposure with other tax authorities in all countries where the associated enterprises have activities.

Transfer Pricing Webinar

Register for our Webinar on 29th January at 10h00 AM to learn more about this recent court case.


Comply with the coming DAC 6 obligations

By | Reminder

The application of the Directive on Administrative Cooperation (“DAC 6”) is approaching and it is important to be aware of the most important aspects of the coming new compliance regulation as follows:

A. Background
On 25 March 2020, the Luxembourg Parliament adopted the Law regarding the mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements

B. Scope

A reporting intermediary must transmit the information that is within its knowledge, possession, or control in connection with the reportable cross-border arrangements.

Where there is not intermediary and there is no other intermediary responsible for the reporting obligation, then it falls on the relevant taxpayer.

An intermediary has the possibility to prove by any means that the information has already been declared by another intermediary in the same Member State or in another Member State. The Luxembourg Tax Authorities (“LTA”) will make an assessment on a case-by-case basis, based on the facts and circumstances. A written document from the competent authority of the Member State concerned is one means of proof, among others. The sole indication of the arrangement ID will in principle not be considered sufficient. The proof is provided on request to the LTA.

In that context, it is important to understand the following definitions:

  • Reporting intermediary:
    1. Any person who designs, markets, or organises a reportable cross-border arrangement, or makes it available for implementation or manages its implementation.
    2. A service provider qualifies as an intermediary if he knows or could be reasonably expected to know that he has undertaken to provide, directly or by means of other persons, aid, assistance or advice with respect to designing, marketing, organizing, making available for implementation or managing the implementation of a reportable cross-border arrangement.
  • Relevant taxpayer: Any person to whom a reportable cross-border arrangement is made available for implementation, or who is ready to implement a reportable cross-border arrangement or has implemented the first step of such an arrangement.
  • Reportable cross-border arrangement: any cross-border arrangement linked to one or more of the types of taxes referred to in article 1 of the law of 29 March 2013 on administrative cooperation in the field of taxation and which contains at least one of the hallmarks.
  • Hallmarks: Characteristics or feature of a cross-border arrangement that indicates a potential risk of tax avoidance as listed below:
    1. Generic hallmarks linked to the main benefit test
    2. Specific hallmarks linked to the main benefit test
    3. Specific hallmarks related to cross-border transactions
    4. Specific hallmarks concerning automatic exchange of information and beneficial ownership
    5. Specific hallmarks concerning transfer pricing

C. Filing obligations

A reporting intermediary or relevant taxpayer must transmit the information related to an arrangement to the LTA by electronic filing on the secure state platform, MyGuichet, using:

  1. the manual entry through a specific process on MyGuichet or
  2. the drag and drop of a specific XML.

D. Deadlines

A reporting intermediary or relevant taxpayer must transmit the information related to the reportable cross-border arrangement according to its implementation date as follows:

  • June 25, 2018 and June 30, 2020: the deadline is 28 February 2021.
  • July 1, 2020 and December 31, 2020: the deadline is 30 January 2021.
  • January 1, 2021 onwards: the deadline is 30 days.

E. Penalty

The intermediary or relevant taxpayer may be liable to a fine not exceeding EUR 250,000 because of:

  1. Failure to file information
  2. Late filing or filing of incomplete or inaccurate data
  3. Non-compliance by intermediaries.

The fine is set by the tax office for withholding tax on interest.


Deadline for filing the CBC obligations is approaching

By | Reminder

The deadline for filing the Country-by-Country (“CBC”) obligations is approaching and it is an opportunity to remember the basis of this compliance regulation as follows:

A. Background
On 13 December 2016, to ensure compliance with the BEPS Action Plan, the Luxembourg Parliament adopted Law of 23 December 2016 on Country-by-Country (“CBC”) reporting as one measure in connection with the automatic exchange of information (AEOI) for tax matters.

B. Scope
Multinational Enterprise (“MNE”) groups whose total consolidated turnover is higher than EUR 750 million during the fiscal year immediately falls within the scope of CBC.

C. Filing obligations
There are 2 types of annual CBC filing obligations:

  • CBC notifications filed by all the Luxembourgish entities within the MNE Group to provide details on the role of the entity submitting the notification and identifies the entity
    responsible to file the CBC Report (“Reporting entity”).
  • CBC report submitted by the Reporting entity for the MNE Group.

D. Deadline

  • Luxembourgish entities within the MNE Group must submit annually The CBC notifications no later than the last day of the reporting fiscal year 2020 for the MNE group.
  • the Reporting entity must submit the CBC report no later than 12 months after the last day of the reporting fiscal year 2019 for the MNE group.
  • Therefore, the deadline is approaching for taxpayers falling in CBC obligations:

E. Penalty
A penalty may apply up to EUR 250,000.00 because of:

  • Fails or late filing of the CBC Report.
  • Fail or late filing of the CBC Report notification.
  • Files incomplete or inaccurate information.

F. How can we help?
TFPS with a dedicated and professional Transfer Pricing team can assist with the filing of CBC notifications and reviewing of the CBC reports in line with Luxembourgish CBC and OECD regulation. For more information make click here or get in touch with our team.




TFPS is celebrating 3 years

By | Announcements

TransFair Pricing Solutions (“TFPS”) is already celebrating three years in business. It is a great opportunity to celebrate and say thank you again to all our customers for choosing us and giving us the opportunity to be their partner for transfer pricing and valuation matters.

In the last three years, International Tax Review awarded TFPS for the European Tax Awards and the World Transfer Pricing Edition. We shared our insights through several local and international workshops and contributed with opinion statements on transfer pricing general court cases. We expanded our portfolio of solutions, grew our team, moved to bigger premises, and became Luxembourg delegate for the Tax Advisers Europe Fiscal Committee.

Most importantly, we grew with the only aim to overpass our clients’ expectations by constantly improving and adapting our solutions. We believe that rigor has been the key element of our success.

On a more personal level, this exciting entrepreneurial journey has been full of optimism, hard work, persistence, determination, and I obviously cannot discard here the stress and working nights related.

Last but not least, thanks to all who have contributed and supported the activity of TFPS. I look forward to continuing this journey together with our partners.

Yours sincerely,

Vanessa Ramos Ferrín
Managing Partner
Transfer Pricing & Valuation
TransFair Pricing Solutions S.A.

TFPS was awarded in the World Transfer pricing 2021

By | Announcements

The International Tax Review (ITR) awarded TransFair Pricing Solutions (“TFPS”) with tier three ranking in the 2021 World Transfer Pricing guide. This tier rating is thanks to the positive feedback of our clients and peers, and it recognizes TFPS’s high quality, expertise, commitment, independence, and fair solutions in the market.

The World Transfer Pricing 2021 is a comprehensive guide to the world’s leading transfer pricing practitioners, which includes rankings and profiles of the most effective professionals in the world on this field, covering over 64 jurisdictions on every continent. ITR editorial team’s research produced this guide based on the feedback from the market and tax professionals around the world.

TFPS is an independent firm dedicated to providing tailor-made transfer pricing and valuation solutions to financial and corporate entities. TFPS team comprises transfer pricing and valuation experts who provide quality, expertise, commitment, independence, and fair solutions to its clients.

All details about the ranked companies are available at this link.

Transfer Pricing Solutions - WorldTP Recommended Firm 2021

TFPS has moved its office to Kirchberg district

By | Announcements

TransFair Pricing Solutions (“TFPS”) announces that because of continued growth and expansion of its transfer pricing and valuation activity, TFPS has moved to a new office location in the Kirchberg district. Our new address is at second floor, 46A, Avenue John F. Kennedy, L-1855 Luxembourg. Our telephone remains unchanged +352 20 60 09 98.

We look forward to working with you from our new location!


Transfer Pricing Solutions - Kirchberg Location

TFPS has been nominated for the European Tax Awards 2020

TFPS has been nominated for the European Tax Awards 2020

By | Announcements

TransFair Pricing Solutions (“TFPS”) has been shortlisted for the Second consecutive year for the European Tax Awards 2020 in the category “Best European newcomer firm” by International Tax Review.

The ITR European Tax Awards have taken place annually since 2005 and recognise remarkable achievements and developments by international tax professionals from the Europe, Middle East and Africa (EMEA) region over a 12-month period. Aside from the national awards in more than 30 jurisdictions, there are also awards in regional and individual categories for the best performers.

Because of the COVID-19 pandemic, this year’s winners of the European Tax Awards will be announced and published online on May 21 at 2pm BST.

All details about the shorlisted companies are available at this link.

Disclosure of cross-border arrangements (“DAC 6”)

Disclosure of cross-border arrangements (“DAC 6”)

By | Flash news


The law of 25 March 2020, implementing the disclosure of cross-border arrangements (“DAC 6”), has been published in Mémorial A and entered into force from 1 July 2020. However, it is requested that all cross-border arrangements occurred between 25 June 2018 and 30 June 2020 must be reported by intermediaries or taxpayers by 31 August 2020. The law can be found on the following link.

TFPS was ranked in the World Transfer Pricing Edition 2020

TFPS was ranked in the World Transfer Pricing Edition 2020

By | Announcements

TransFair Pricing Solutions (“TFPS”)has been ranked in the World Transfer Pricing Edition 2020 in the category “Luxembourg Transfer Pricing Firm”. The World TP is the comprehensive guide to the world’s leading transfer pricing firms. It is produced in association with the International Tax Review, it provides rankings and profiles of the most effective TP practitioners in the world, covering more than 55 jurisdictions located on every continent.

All details about the ranking are available at this link



TFPS has been nominated for the European Tax Awards 2019

TFPS has been nominated for the European Tax Awards 2019

By | Announcements

TransFair Pricing Solutions (“TFPS”) has been nominated for the European Tax Awards 2019 in the category “Luxembourg Transfer Pricing Firm of the Year” by International Tax Review, one of the most prestigious tax law rankings. 

The European Tax Awards take place annually and recognise the leading tax and transfer pricing professionals around Europe. The firms are judged on key criteria such as innovation, complexity, and size of their transactions.

The gala and the announcement of the final results will take place in London on 16th May.

All details about the event including all nominations are available at this link.