On May 21st, 2021, the Supreme Administrative Court of Finland overturned the Helsinki Administrative Court’s decision, KHO 2021/36(66), that the interest rate should reflect the borrower’s credit rating, on the grounds that the taxpayer was providing a service of borrowing on behalf of the subsidiary for which it should have only received a cost-plus service fee instead a financing transaction. Within that context, the key question of the case is whether cost plus is the proper transfer pricing method to determine the arm’s length interest rate considering that the tax assessments of A Oyj for the tax years 2009 to 2011 were adjusted to the taxpayer’s disadvantage.
