In April 2025, the Norwegian Court of Appeals issued a significant ruling in the case Norway vs. DHL Global Forwarding (Norway) AS (Case No. LB-2024-100530), focusing on the tax deductibility of payments for intra-group services.
Background
DHL Global Forwarding (Norway) AS, a Norwegian subsidiary of the multinational logistics company DHL, paid other entities in the group for administrative and management services. The Norwegian Tax Authority questioned the deductibility of these payments, arguing that there was insufficient demonstration of the services rendered and that the costs corresponded to market prices.
Court Decision
The Court of Appeals held that the company must provide sufficient evidence to deduct intra-group service payments:
- The effective rendering of services.
- The business necessity of such services.
- The costs’ compliance with the Arm’s Length Principle.
In this case, the court ruled that DHL had not met these requirements, and therefore, the payments were not tax-deductible.
Implications for Multinational Companies
This ruling highlights the importance of:
- Documenting intragroup services in detail.
- Demonstrating the business necessity and benefit of such services.
- Ensuring that costs are within the Arm’s Length Principle.
Multinational companies should review and strengthen their Transfer Pricing policies and documentation to avoid adverse tax adjustments.
Need Transfer Pricing Advice?
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Source: TPCases