The case discusses whether royalties charged by Adecco Switzerland to Adecco Denmark for the use of the group’s IP in Denmark were at arm’s length in light of Danish domestic tax law and the OECD TPG. However, the case goes beyond mere transfer pricing issues and addresses whether royalties paid to Adecco Switzerland were deductible to the extent that the expense was necessary to generate income in Denmark. The Danish Supreme Court held that there was no basis for the Danish tax authorities’ royalty adjustment, thereby setting aside previous rulings of the Danish National Tax Tribunal and High Court.
