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Transfer Pricing Assessment Shocks Danish Company

By Ulrika Lomas, Tax-News.com, Brussels

12 June 2013


A Danish company has been hit with a DKK5.5bn (USD980m) tax bill after tax authorities ruled that the transfer of rights and patents to two subsidiaries in Switzerland had been made at too low a price, and that the parent company should have been paid more for services it provided.

The case concerns Novo Nordisk, which is Denmark's largest listed company, and the total transfer pricing reassessment of an extra DKK22bn (USD3.9bn) is the largest in the country's history for a single company.

In 2006 and 2007 Novo Nordisk had transferred its biopharmaceutical division to Switzerland, and transferred patents relating to a growth hormone, Norditropin, and a haemophilia drug, NovoSeven.

According to a report from Danish tax lawyers Vistisen, Danish tax authorities ruled that the transfers should have cost an extra DKK17.6bn in total, while charges for services such as administration, research and production made on behalf of the subsidiaries from 2005-09 should have cost an extra DKK4.2bn.

The company has now appealed to the Danish Administrative Tax Tribunal.

TAGS: tax | patents | Denmark | tax authority | transfer pricing | Switzerland | services

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