tax notes international/s i taxanalysts German Court Ruling Focuses on Transfer Pricing Formalities 89989 by Axel Eigelshoven and Axel Nientimp Reprinted from Tax Notes Int'l, 18 August 2003, p. 667
(C) Tax Analysts 2003. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content. German Court Ruling Focuses on Transfer Pricing Formalities by Axel Eigelshoven and Axel Nientimp Reprinted from Tax Notes Int’l, 18 August 2003, p. 667 tax notes internationalSM
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Practitioners, Corner German Court Ruling Focuses on Transfer Pricing Formalities ry Axel eigelshoven and Axel Nientimp -N of 30 percent, resulting in an operating margin of Arel Eigelshouen and Axel Nientimp are with 15 percent. The contract required a year-end ad Deloitte Touche in Dusseldorf. o 2003 Deloitte justment to ensure that the license fee complied Touche. All rights reserved with the arm s-length principle. Under the con tract, the parties were required to take into ac- count the royalties agreed with third parties and the operating margins realized by comparable e lower tax court of munich has issued a companies. At year-end, the taxpayer increased ransfer pricing ruling interpreting the the royalty rate to 40 percent, supported by roy arms-length principle that focuses on transfer alty rates charged by the licensor to unrelated li pricing formalities. It is one of the few cases in censees, which resulted in an operating margin of German jurisprudence to address this issue. The 5 percent. This net margin was also supported by ruling potentially could provide insight into the third-party evidence. The tax office agreed that if relationship between the German interpretation a 40 percent royalty had been charged from the ag品38 of the arm's-length principle, which often focuses outset, an income adjustment would not be im- rer, they disalle tion of article 9 of the oecd model income tax the year-end adjustment because the adjustment treaty and the oecd transfer pricing guidelines mechanism was not clearly agreed to upfront which do not include formal requirements In a third example, gmbH C received a service from its Dutch parent Gmbh did not pay the re Introduction ceivable in the following years. The tax office ac knowledged that the service ch made at A Germany's tax authorities have often chal- arms-length, but it disallowed a deduction be nged the transfer prices of international compa cause the payment was not made nies on grounds of form rather than of substance The tax authorities find support for their posi The following real-life cases are good examples of tion in a long line of Supreme Tax Court rulings the approach sometimes taken by german tax auditors dealing with domestic tax issues. In some of those cases, a company shareholder, who is also the gmbh A paid a management fee to its French managing director, agreed to a bonus at year-end parent company under a contract that provides for The Supreme Tax Court disallowed a deduction the delivery of information technology and mar for the bonuses purely on grounds of form. In keting services. During the audit period, Gmbha other words, the payments were only deductible if was also charged for management services. The made under clear and unambiguous agreements tax auditors disallowed a deduction, arguing that entered into in advance.2 the charges were“ imposed” by the parent com pany and the charges had not been agreed to in ad Germany's interpretation of the arms-length vance. The tax office did not believe it was principle often results in a significant risk of dou ble taxation for the taxpayer because the foreign necessary to analyze whether the services were tax authorities are not prepared to grant a corre- received and whether they satisfied the arms- length test. sponding adjustme In another example, GmbH B licensed software from its U.S. parent at a preliminary royalty rate See, for example, the decisions of the Supreme Tax Court DEcision of Munich Lower Tax Court dated 16 July 2002 dated: 23 October 1985, ref. no I R 247/81, BStBl II 1986, pp 195 Deutsches Steuerecht Entscheidungsdienst 2003, pp 868 ff; ap. ff: 1 October 1986. ref no. IR stB.I1987,pp.459f: peal lodged at Germany's Supreme Tax Court, ref no IR 27/03 and 6 December 1995, ref no IR 88/94, BStBL. II 1996, pp 383 ff. Tax Notes International 18 August2003·667
Tax Notes International 18 August 2003 • 667 German Court Ruling Focuses on Transfer Pricing Formalities by Axel Eigelshoven and Axel Nientimp The Lower Tax Court of Munich has issued a transfer pricing ruling interpreting the arm’s-length principle that focuses on transfer pricing formalities. It is one of the few cases in German jurisprudence to address this issue. The ruling potentially could provide insight into the relationship between the German interpretation of the arm’s-length principle, which often focuses on formalities, and the international interpretation of article 9 of the OECD model income tax treaty and the OECD transfer pricing guidelines, which do not include formal requirements.1 Introduction Germany’s tax authorities have often challenged the transfer prices of international companies on grounds of form rather than of substance. The following real-life cases are good examples of the approach sometimes taken by German tax auditors. GmbH A paid a management fee to its French parent company under a contract that provides for the delivery of information technology and marketing services. During the audit period, GmbH A was also charged for management services. The tax auditors disallowed a deduction, arguing that the charges were “imposed” by the parent company and the charges had not been agreed to in advance. The tax office did not believe it was necessary to analyze whether the services were received and whether they satisfied the arm’slength test. In another example, GmbH B licensed software from its U.S. parent at a preliminary royalty rate of 30 percent, resulting in an operating margin of 15 percent. The contract required a year-end adjustment to ensure that the license fee complied with the arm’s-length principle. Under the contract, the parties were required to take into account the royalties agreed with third parties and the operating margins realized by comparable companies. At year-end, the taxpayer increased the royalty rate to 40 percent, supported by royalty rates charged by the licensor to unrelated licensees, which resulted in an operating margin of 5 percent. This net margin was also supported by third-party evidence. The tax office agreed that if a 40 percent royalty had been charged from the outset, an income adjustment would not be imposed. However, they disallowed a deduction for the year-end adjustment because the adjustment mechanism was not clearly agreed to upfront. In a third example, GmbH C received a service from its Dutch parent. GmbH C did not pay the receivable in the following years. The tax office acknowledged that the service charge was made at arm’s-length, but it disallowed a deduction because the payment was not made. The tax authorities find support for their position in a long line of Supreme Tax Court rulings dealing with domestic tax issues. In some of those cases, a company shareholder, who is also the managing director, agreed to a bonus at year-end. The Supreme Tax Court disallowed a deduction for the bonuses purely on grounds of form. In other words, the payments were only deductible if made under clear and unambiguous agreements entered into in advance.2 Germany’s interpretation of the arm’s-length principle often results in a significant risk of double taxation for the taxpayer because the foreign tax authorities are not prepared to grant a corresponding adjustment. Practitioners’ Corner Axel Eigelshoven and Axel Nientimp are with Deloitte & Touche in Düsseldorf. © 2003 Deloitte & Touche. All rights reserved. 1Decision of Munich Lower Tax Court dated 16 July 2002, Deutsches Steuerecht Entscheidungsdienst 2003, pp. 868 ff.; appeal lodged at Germany’s Supreme Tax Court, ref. no. I R 27/03. 2See, for example, the decisions of the Supreme Tax Court dated: 23 October 1985, ref. no. I R 247/81, BStBl. II 1986, pp. 195 ff.; 1 October 1986, ref. no. I R 54/83, BStBl. II 1987, pp. 459 ff.; and 6 December 1995, ref. no. I R 88/94, BStBl. II 1996, pp. 383 ff. (C) Tax Analysts 2003. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content
Practitioners' Corner F acts The decision appears consistent with the inter national interpretation of the arms-length stan The case before the Lower Tax Court of Munich dard because the intangibles described in the involved a german subsidiary of an Italian multi- contract know-how and trademarks national. The subsidiary, which manufactures never used by the licensee Logic, therefore dic- products primarily for the automotive industry, tates that the payments are nondeductible. The entered into a technical assistance and licensing court, however, did not analyze in detail whether agreement with its Italian parent. The contract the charges were at arms-length and instead fo- covered licensing of technical know-how, licensing cused on formalities, which is in line with court of the parent's brand and product names, and cases dealing with domestic tax issues technical assistance First, the tax court analyzed the relationship between Germany' s rules on hidden profit distri cluding patents, registered designs, copyrights, bution ( section 8, paragraph 3 of the Corporate In was required to grant full access to its laborato- income tax treaty. The court held that article 9 is ries, offices, and plants, and to familiarize th not self-executing, but only limits domestic law German licensee with the technical knowledge. This view is shared in German tax literature However, the tax office and the taxpayer agreed Second, the court held that german law is fully that the German subsidiary never exercised these in line with the international interpretation ofthe rights. Moreover, the appendix, which was in arm's-length principle, but unfortunately the tended to detail the technical know-how, was left court did not provide evidence to support its blank opinion Based on domestic tax law, the court reempha a832938 Germany's interpretation of the sized the long-standing jurisprudence of the Su arm's-length principle often results in a preme Tax Court on hidden profit distributions under which an income adjustment is justified if a significant risk of double taxation for prudent business manager would not have agreed the taxpayer because the foreign tax to the contract. This occurs when a company ac authorities are not prepared to grant a cepts contractual terms in transactions with re corresponding adjustment. hat differ from the tey parties would have agreed to under similar condi ddition for ity shareholder, th The contract also referred to an appendix for transactions with the corporation must be based the license of the parent's brand and product on contractual agreements entered into in ad names that were to be used in the german territo- vance, in clear and unambiguous terms ry The appendix was not completed. Moreover, the The court then analyzed the contracts and trademarks were never used because the German found that a prudent business manager would not subsidiary relied on its own brand. The subsidiary have agreed to the contract group's name on its lett erhead and invoices and did not use the logo of the parent The court held that the content of the contract must be clearly defined and both parties must company. clearly understand their rights and obligations. A Under the technical assistance provision of the prudent business manager would only agree to contract, the Italian licensor was required to pro- pay a royalty of 0.8 percent if there is a clear vide qualified personnel at the licensee s request agreement in advance to do so, which is legally The agreement provided for a license fee of 0.8 percent of the German subsidiary's turnover, plus all direct costs for technical assistance The German tax office only accepted the deduc- tion for the costs of technical support and dial lowed the deduction for the license fee 3See Eigelshoven, Vogel/Lehner (eds ) Doppelbesteuerung. abkommen(Munchen: Verlag C H. Beck, 2003), article 9, not 18; Becker, Becker/Hoppner/Grotherr/Kroppen (eds ) Doppel besteuerungsabkommen(Herne-Berlin: Verlag Neue Wirt Decision schafts-Briefe, 1996), article 9, note 66; Wassermeyer Debatin/Wassermeyer, Doppelbesteuerung (Munchen: Verlag The lower tax court of munich ruled that the C H. Beck, 2002), article 9, notes 4 and 103: and Rasch German tax office's position was fully in line with Konzernverrechnungspreise im nationalen, bilateralen und europaischen Konzern(Koln: Dr. Otto Schmidt Verlag, 2001) German tax law principles 668·18 August2003 Tax Notes International
Facts The case before the Lower Tax Court of Munich involved a German subsidiary of an Italian multinational. The subsidiary, which manufactures products primarily for the automotive industry, entered into a technical assistance and licensing agreement with its Italian parent. The contract covered licensing of technical know-how, licensing of the parent’s brand and product names, and technical assistance. Under the license for technical know-how, including patents, registered designs, copyrights, and other commercial property rights, the licensor was required to grant full access to its laboratories, offices, and plants, and to familiarize the German licensee with the technical knowledge. However, the tax office and the taxpayer agreed that the German subsidiary never exercised these rights. Moreover, the appendix, which was intended to detail the technical know-how, was left blank. Germany’s interpretation of the arm’s-length principle often results in a significant risk of double taxation for the taxpayer because the foreign tax authorities are not prepared to grant a corresponding adjustment. The contract also referred to an appendix for the license of the parent’s brand and product names that were to be used in the German territory. The appendix was not completed. Moreover, the trademarks were never used because the German subsidiary relied on its own brand. The subsidiary only used the group’s name on its letterhead and invoices and did not use the logo of the parent company. Under the technical assistance provision of the contract, the Italian licensor was required to provide qualified personnel at the licensee’s request. The agreement provided for a license fee of 0.8 percent of the German subsidiary’s turnover, plus all direct costs for technical assistance. The German tax office only accepted the deduction for the costs of technical support and disallowed the deduction for the license fee. Decision The Lower Tax Court of Munich ruled that the German tax office’s position was fully in line with German tax law principles. The decision appears consistent with the international interpretation of the arm’s-length standard because the intangibles described in the contract — know-how and trademarks — were never used by the licensee. Logic, therefore, dictates that the payments are nondeductible. The court, however, did not analyze in detail whether the charges were at arm’s-length and instead focused on formalities, which is in line with court cases dealing with domestic tax issues. First, the tax court analyzed the relationship between Germany’s rules on hidden profit distribution (section 8, paragraph 3 of the Corporate Income Tax Act) and article 9 of the Italy-Germany income tax treaty. The court held that article 9 is not self-executing, but only limits domestic law. This view is shared in German tax literature.3 Second, the court held that German law is fully in line with the international interpretation of the arm’s-length principle, but unfortunately the court did not provide evidence to support its opinion. Based on domestic tax law, the court reemphasized the long-standing jurisprudence of the Supreme Tax Court on hidden profit distributions under which an income adjustment is justified if a prudent business manager would not have agreed to the contract. This occurs when a company accepts contractual terms in transactions with related parties that differ from the terms unrelated parties would have agreed to under similar conditions. In addition, for a majority shareholder, the transactions with the corporation must be based on contractual agreements entered into in advance, in clear and unambiguous terms. The court then analyzed the contracts and found that a prudent business manager would not have agreed to the contract. The court held that the content of the contract must be clearly defined and both parties must clearly understand their rights and obligations. A prudent business manager would only agree to pay a royalty of 0.8 percent if there is a clear agreement in advance to do so, which is legally 668 • 18 August 2003 Tax Notes International Practitioners’ Corner 3See Eigelshoven, Vogel/Lehner (eds.), Doppelbesteuerungsabkommen (München: Verlag C.H. Beck, 2003), article 9, note 18; Becker, Becker/Höppner/Grotherr/Kroppen (eds.), Doppelbesteuerungsabkommen (Herne-Berlin: Verlag Neue Wirtschafts-Briefe, 1996), article 9, note 66; Wassermeyer, Debatin/Wassermeyer, Doppelbesteuerung (München: Verlag C.H. Beck, 2002), article 9, notes 4 and 103; and Rasch, Konzernverrechnungspreise im nationalen, bilateralen und europäischen Konzern (Köln: Dr. Otto Schmidt Verlag, 2001), p. 192. (C) Tax Analysts 2003. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content
Practitioners, Corner valid. Otherwise, it will be assumed that the con- guidelines do not address transfer pricing formal ditions are“ imposed” by the parent company. ities. Note 1.36 of the guidelines describes the The court also held that if a contract is based substance over form requirement, which is also in- a percentage of turnover, a prudent business mar cluded in the domestic tax laws of several cou ager would insist that the licensors obligation tries. 4 are clearly defined by the contract. However, the Under the oecd guidelines, a tax authority court found that the licensor's obligations under may disregard the characterization of a transac the contract were unclear. and therefore the li- tion and recharacterize it in accordance with its censee could not require the licensor to complete substance. For example, if a company provides its obligations under the contract. Because of this management services to its subsidiaries,an finding, the court decided that it did not need to arm s-length charge must be assessed. The charge rule on whether the license fee was reasonable must be assessed whether there is Regarding technical assistance rendered by th tract. and if there is a contract. even when the con parent under the contract, the court emphasized tract fails to follow certain formalities (for that a charge may not be made if the services are example, by failing to include appendices, such as for administration, management, consultancy, or the case at hand) similar services. These expenses are incurred for the benefit of the shareholder and are not deduct The OECD transfer pricing guidelines ible at the subsidiary level. do not support the position taken by Moreover, the court found that execution of the the german tax authorities and the contract did not reflect the terms of the contract The contract suggested that a cost allocation courts decision because the guidelines scheme would be used for the services. However do not address transfer pricing ag品38 the company took a fixed percentage of sales to formalities compensate for the services The tax office only allowed a deduction for the Moreover, from a practical viewpoint, the other expenses incurred for certain work days if the tax tax authority would be unwilling to grant a corre- payer had provided evidence that the Italian per- sponding adjustment if the services w ere ren. sonnel were present in Germany. The court dered and the fee was paid at arms length. Ag gain concluded that the tax offices estimate of the ex the other tax authority would not accept the lack penses did not infringe on the taxpayers rights f a contract or the failure to meet certain formali- ties as an argument to reduce its fiscal income. If Formalities Under Domestic and that were the case, missing agreements could be International Tax Law used by the taxpayer as a tax-planning tool. For example, a company that would like to obtain a de- Under international tax law principles, the for duction for management services in the country of malities addressed by the tax court only play a mi- the service provider would simply not conclude nor role. Article 9 of the OECD model income tax any contracts. The country of the recipient would treaty provides that the arms-length principle is be unwilling to grant a deduction at year-end, and subject to conditions "made"or"imposed"between the country of the renderer would not be able to two associated enterprises. The decisive issue is challenge the transfer prices because there is no whether the services were rendered for the benefit contract of the recipient and, if so, whether the price for the The Lower Tax Court did not allow the taxpayer services was at arms length. to file an appeal with the Supreme Tax Court be This seems very different from the German pru- cause the Lower Tax Court decided that a decision dent business manager principle, which the court of the Supreme Tax Court was unnecessary to the mentions several times in its ruling. The court further development of the tax law. However, the finds that "imposed" conditions or missing appen- Supreme Tax Court has now allowed an appeal dices are indications that the transfer prices are Hopefully the Supreme Tax Court will provide not at arms length. Under the court's logic, a pru- guidance on the relationship between domestic dent business manager would be unwilling to pay compensation for its contractual obligations. Be cause of that the court explicitly rejected testing whether the charges were made at arm s length The OECD transfer pricing guidelines do not See U.S. reg. section 1.482-1(f)(2)i); for Australia, section support the position taken by the German tax au- 2.72TR97/20: and for Canada, section 43 ff. Information Circular thorities and the court's decision because the 87-2R. Tax Notes International 18 August2003·669
Tax Notes International 18 August 2003 • 669 valid. Otherwise, it will be assumed that the conditions are “imposed” by the parent company. The court also held that if a contract is based on a percentage of turnover, a prudent business manager would insist that the licensor’s obligations are clearly defined by the contract. However, the court found that the licensor’s obligations under the contract were unclear, and therefore the licensee could not require the licensor to complete its obligations under the contract. Because of this finding, the court decided that it did not need to rule on whether the license fee was reasonable. Regarding technical assistance rendered by the parent under the contract, the court emphasized that a charge may not be made if the services are for administration, management, consultancy, or similar services. These expenses are incurred for the benefit of the shareholder and are not deductible at the subsidiary level. Moreover, the court found that execution of the contract did not reflect the terms of the contract. The contract suggested that a cost allocation scheme would be used for the services. However, the company took a fixed percentage of sales to compensate for the services. The tax office only allowed a deduction for the expenses incurred for certain work days if the taxpayer had provided evidence that the Italian personnel were present in Germany. The court concluded that the tax office’s estimate of the expenses did not infringe on the taxpayer’s rights. Formalities Under Domestic and International Tax Law Under international tax law principles, the formalities addressed by the tax court only play a minor role. Article 9 of the OECD model income tax treaty provides that the arm’s-length principle is subject to conditions “made” or “imposed” between two associated enterprises. The decisive issue is whether the services were rendered for the benefit of the recipient and, if so, whether the price for the services was at arm’s length. This seems very different from the German prudent business manager principle, which the court mentions several times in its ruling. The court finds that “imposed” conditions or missing appendices are indications that the transfer prices are not at arm’s length. Under the court’s logic, a prudent business manager would be unwilling to pay compensation for its contractual obligations. Because of that, the court explicitly rejected testing whether the charges were made at arm’s length. The OECD transfer pricing guidelines do not support the position taken by the German tax authorities and the court’s decision because the guidelines do not address transfer pricing formalities. Note 1.36 of the guidelines describes the substance over form requirement, which is also included in the domestic tax laws of several countries.4 Under the OECD guidelines, a tax authority may disregard the characterization of a transaction and recharacterize it in accordance with its substance. For example, if a company provides management services to its subsidiaries, an arm’s-length charge must be assessed. The charge must be assessed whether there is a written contract, and if there is a contract, even when the contract fails to follow certain formalities (for example, by failing to include appendices, such as the case at hand). The OECD transfer pricing guidelines do not support the position taken by the German tax authorities and the court’s decision because the guidelines do not address transfer pricing formalities. Moreover, from a practical viewpoint, the other tax authority would be unwilling to grant a corresponding adjustment if the services were rendered and the fee was paid at arm’s length. Again, the other tax authority would not accept the lack of a contract or the failure to meet certain formalities as an argument to reduce its fiscal income. If that were the case, missing agreements could be used by the taxpayer as a tax-planning tool. For example, a company that would like to obtain a deduction for management services in the country of the service provider would simply not conclude any contracts. The country of the recipient would be unwilling to grant a deduction at year-end, and the country of the renderer would not be able to challenge the transfer prices because there is no contract. The Lower Tax Court did not allow the taxpayer to file an appeal with the Supreme Tax Court because the Lower Tax Court decided that a decision of the Supreme Tax Court was unnecessary to the further development of the tax law. However, the Supreme Tax Court has now allowed an appeal. Hopefully the Supreme Tax Court will provide guidance on the relationship between domestic Practitioners’ Corner 4See U.S. reg. section 1.482-1(f)(2)(ii); for Australia, section 2.72 TR 97/20; and for Canada, section 43 ff. Information Circular 87-2R. (C) Tax Analysts 2003. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content
Practitioners' Corner and international tax law principles and further fore legal certainty is achieved. However, the tax insight into the interpretation of the arms-length payers case is weak because it admitted that the principle intangibles were not used, and it is therefore likely that the taxpayer will be subject to double Conclusion taxation. Taxpayers should not go to court, but rather seek relief under the competent authority Taxpayers should draw three conclusions from procedures of the tax treaties or under the EU ar the lower Tax Court's decision bitration convention This alternative is more effi First, taxpayers should not accept an income cient in terms of time and cost than a court djustment if it is only based on formalities. Arti proceeding, and double taxation can generally be cle 9 of the OECD model income tax treaty bars avoided, even if one of the tax authorities imposes the tax authorities from imposing an income ad an income adjustment justment if it is only based on a failure to comply Third, for tax planning purposes, clear condi- with formal requirements tions should be agreed upon in writing in advance Second, if the tax auditors stick to their of the transaction. In the case of year-end adjust formalistic view, it is not advisable to proceed in ments, the tax authorities often are willing to ac the German tax courts. The case of the Lower Tax cept the adjustments if the result complies with Court deals with 1991 and 1992. It will take an- the arms-length principle and if the year-end ad other two to three years before the case is heard by justment is clearly described in the contract in ad the Supreme Tax Court. It may take 15 years be vance a832938 The Tax Directory Take a look at What's New! The ultimate tax contact resource just got better! In response to subscriber requests, we've discontinued the Private Sector Professionals Now The Tax Directory gives you the same fast Worldwide volume. Our Government Officials convenient access to tax professionals in a more Worldwide volume now contains the unique concise and condensed format- making it easier information from the Private Sector Professionals than ever for you to find a tax professional Worldwide volume, including Tax and Business worldwide! The Tax Directory still is the most Journalists. Professional associations. and Tax complete, accurate, and up-to-date source of Groups and Coalitions information on tax professionals available today Order The Tax Directory today! Simply call Tax Analysts at 800-955-3444, e-mail sales( @tax.org, orvisitwww.taxanalysts.com TD101 670 18 August 2003 Tax Notes International
and international tax law principles and further insight into the interpretation of the arm’s-length principle. Conclusion Taxpayers should draw three conclusions from the Lower Tax Court’s decision. First, taxpayers should not accept an income adjustment if it is only based on formalities. Article 9 of the OECD model income tax treaty bars the tax authorities from imposing an income adjustment if it is only based on a failure to comply with formal requirements. Second, if the tax auditors stick to their formalistic view, it is not advisable to proceed in the German tax courts. The case of the Lower Tax Court deals with 1991 and 1992. It will take another two to three years before the case is heard by the Supreme Tax Court. It may take 15 years before legal certainty is achieved. However, the taxpayer’s case is weak because it admitted that the intangibles were not used, and it is therefore likely that the taxpayer will be subject to double taxation. Taxpayers should not go to court, but rather seek relief under the competent authority procedures of the tax treaties or under the EU arbitration convention. This alternative is more efficient in terms of time and cost than a court proceeding, and double taxation can generally be avoided, even if one of the tax authorities imposes an income adjustment. Third, for tax planning purposes, clear conditions should be agreed upon in writing in advance of the transaction. In the case of year-end adjustments, the tax authorities often are willing to accept the adjustments if the result complies with the arm’s-length principle and if the year-end adjustment is clearly described in the contract in advance. ✦ 670 • 18 August 2003 Tax Notes International Practitioners’ Corner (C) Tax Analysts 2003. All rights reserved. Tax Analysts does not claim copyright in any public domain or third party content