Impact of European Court’s VAT Decision on Transfer Pricing and Customs Valuation

• European court decision in Högkullen case impacts transfer pricing and customs
• Högkullen provided various support services to subsidiaries, charging around £180k
• Charge calculated using transfer pricing principles, excluding shareholder costs
• Högkullen reclaimed all VAT, while subsidiaries could not reclaim all VAT on costs
• Swedish tax authority argued for including all costs in Högkullen’s charge
• CJEU recognized services as separate, supporting Högkullen’s argument
• Decision contradicts UK court’s approach in Jupiter Asset Management case
• Customs authorities challenge transfer pricing values for customs purposes
• No clarity or single approach for transfer pricing adjustments in customs
• Different tax authorities may value and treat transactions differently
• Chancellor may increase VAT anti-avoidance legislation to boost Exchequer receipts
• Potential for differing corporate tax and VAT or duty values internationally and domestically

Source: rsmuk.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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