The Administrative Court of Appeal in Stockholm issued its decision concerning questions related to the timing of data and information in a benchmarking search that can be used to test whether a price is at arm’s length. The court found that the use of several years of data and information—from the year under review and from previous years—would apply. However, data and information from years after the year under review would constitute “hindsight” and, as such, would not be supported by case law.
The court found support in the OECD Transfer Pricing Guidelines:
The Administrative Court of Appeal, therefore, concluded that the OECD Transfer Pricing Guidelines support the use of several years of data in determining an arm's length price; and that data and information from the year under review and from previous years may be applied in the arm’s length analysis. The court explained that this approach would be the starting point for the three-years’ profit margins to be applied in the analysis of internal prices. However, the use of years after the year under review would constitute hindsight (eftersyn) and, as such, would not be supported by case law.
The court also addressed the importance of applying the interquartile range in a benchmarking search and if companies within the same corporate group operating in different jurisdictions can use different ranges in the benchmarking search to set an arm's length price on the same transaction.
Read a January 2018 report prepared by the KPMG member firm in Sweden
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in 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 4366, 1801 K Street NW, Washington, DC 20006.