Tax Treaty Case Law around the Globe 2021

S. 119Norway: Associated Enterprises (OECD MC Article 9)

Eivind Furuseth

S. 120I. Introduction

In Norway, two important tax treaty cases regarding issues related to Article 9 of the OECD Model Tax Convention (OECD MC) have recently been decided. The first one to be analysed below is a Supreme Court decision from 28 May 2020 regarding the deduction of R&D expenses in a Norwegian group company (the Shell case – cases no. HR-2020-1130-A). The question for the Norwegian Supreme Court was whether the research and development (R&D) costs covered by Norske Shell could be deducted in full by the Norwegian company or whether the R&D costs should have been allocated between the various group companies.

The second case that will be analysed is a decision from the appeal court from 20 January 2020 (Orange case – case no 18-084331ASD-BORG/03). In the Orange case, the main issue for the court was whether the income of a Norwegian taxpayer was reduced due to transactions with related parties, including the correct transfer pricing method applicable in the current situation.

Although both cases regard Article 9 of the OECD MC, the questions analysed by the courts are relatively different. Hence, the analysis of th...