The Supreme Court upheld the DTA' increase in the income as a result of a transfer-pricing adjustment, thus ruling differently than the High Court.
Preliminary studies and performance guarantees
The Supreme Court stated that controlled transactions include all interactions between the related parties, e.g., the provisioning of services, making know-how available etc.
The Supreme Court therefore found that the transactions in question are covered by the Tax Assessment Act and that the feasibility studies, the performance guarantees and the associated know-how provided by MOGAS all have an economic value for the subsidiaries. When providing services with an economic value, independent parties would have made an agreement on profit share, royalty or similar and thus the transactions were not concluded according to the arm's length principle.
The Supreme Court states that it is without significance that the feasibility studies were completed by MOGAS in 1990 and 1992, and thus long before the income years in question.
The Supreme Court found that the transactions regarding time writing were not concluded as they would have been between independent parties. Thus, the Supreme Court agreed that the DTA could determine MOGAS' income on a discretionary basis and that the tax assessment was correct and based on OECD guidelines.
The discretionary assessment
As to the discretionary assessment, the Supreme Court found that the transactions in question were so closely connected that they had to be assessed collectively.
The Supreme Court came to the overall conclusion that APMM and MOGAS must recognise the DTA's assessment of the taxable income. Thus, the Supreme Court upheld the DTA' assessment stating that APMM's joint taxation income for the income years 2006-2008 is increased by DKK 506,431,000, DKK 327,562,000 and DKK 468,185,000 respectively and that MOGAS' taxable income for the income years 2006-2008 is increased by DKK 506,431,000, DKK 327,562,000 and DKK 468,185,000.