Supreme Court Rules on the Use of Comparables Involving Different Functional Profiles

In a recent decision of 15 June 2023, the Supreme Court of the Czech Republic upheld the position of the taxpayer in a case dealing with the comparability of transactions involving different functional profiles of the same taxpayer due to a business restructuring arrangement. In the view of the Supreme Court, the tax administration failed to establish what would have been an arm’s length price in a comparable uncontrolled transaction by choosing a single uncontrolled transaction, which, in the view of the taxpayer and the Court, was not comparable to what the actual controlled transaction was.