Dated 13 August 2024
In Volkswagen Argentina S.A. v AFIP, the Argentine Supreme Court addressed key issues concerning the application of the TNMM method in transfer pricing disputes. The case involved the inclusion of a $177.8 million loan forgiveness in the Rate of Return on Capital Employed (RRCE) and the use of a multi-year RRCE average rather than a single-year metric for 2001.
While the Tax Court sided with Volkswagen Argentina, justifying both the inclusion of loan forgiveness as operational income and the multi-year approach due to sectoral fluctuations, the Supreme Court overturned this decision. It held that loan forgiveness was financial rather than operational, distorting comparability, and ruled that multi-year RRCE violated income tax regulations by not aligning with the specific tax year.
This decision underscores the importance of adhering to accurate accounting classifications and using year-specific data in transfer pricing analyses.
Full Link to English Translation:Â tpcases.com/wp-content/uploads/Argentina-vs-volkswagen_argentina_sa_tf_30954-I-ENG.htm
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