Czech Republic: Tax loss from transfer pricing adjustments abroad denied (court decision)
A court decision concerning claiming a tax loss from transfer pricing adjustments abroad
A court decision concerning claiming a tax loss from transfer pricing adjustments abroad
The Supreme Administrative Court (SAC) recently held that a taxpayer could not claim a tax loss from transfer pricing adjustments abroad.
Summary
In 2013, a Czech taxpayer filed amended tax returns for 2006, 2010, and 2011, following the German tax authority’s adjustment of its transfer prices, in order to claim a tax loss for 2006 and apply it against its tax liability for 2010 and 2011. The tax authority disallowed the tax loss on the grounds that the loss could not be claimed under domestic law, and the SAC confirmed. The SAC rejected the taxpayer’s arguments that the tax loss must be allowed under the Czech-German income tax treaty.
KPMG observation
An adjustment to transfer prices in a cross-border situation may lead to double taxation if it results in a tax loss that cannot be claimed under the general rules for claiming losses in a domestic situation.
Read a December 2022 report prepared by the KPMG member firm in the Czech Republic
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.