Swedish Administrative Court Rules in Favour of the Taxpayer in a Transfer Pricing Case about Control and Substance

The Swedish Administrative Court issued a ruling in favour of the taxpayer in a case that focuses on control over risk and substance, in particular assessing risk taking and how residual profits should be distributed on the basis of control over risks. In light of the ruling, the authors elaborate on taxpayer challenges/issues with the OECD Guidelines’ heavy focus on the connection between people functions and control over risk in certain industries where local tangible assets generate substantial external revenues.