Czech Republic: Tax loss from transfer pricing adjustments abroad denied (court decision)

A court decision concerning claiming a tax loss from transfer pricing adjustments abroad

A court decision concerning claiming a tax loss from transfer pricing adjustments abroad

The Supreme Administrative Court (SAC) recently held that a taxpayer could not claim a tax loss from transfer pricing adjustments abroad. 


In 2013, a Czech taxpayer filed amended tax returns for 2006, 2010, and 2011, following the German tax authority’s adjustment of its transfer prices, in order to claim a tax loss for 2006 and apply it against its tax liability for 2010 and 2011. The tax authority disallowed the tax loss on the grounds that the loss could not be claimed under domestic law, and the SAC confirmed. The SAC rejected the taxpayer’s arguments that the tax loss must be allowed under the Czech-German income tax treaty.

KPMG observation

An adjustment to transfer prices in a cross-border situation may lead to double taxation if it results in a tax loss that cannot be claimed under the general rules for claiming losses in a domestic situation. 

Read a December 2022 report prepared by the KPMG member firm in the Czech Republic


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