During a tax audit, a leading and highly profitable global tobacco multinational corporation (MNC) operating under a Swiss principal model faced recharacterization of transactions and significant transfer pricing (TP) adjustments concerning its distributor in Germany.

The client and their counsel selected NERA as the TP expert in their claim against the German tax authorities. The litigation extended over three years, during which NERA provided forensic analysis and corroborative TP analysis using three different approaches to support the client's position against the tax authorities. NERA’s work included Senior Managing Director Yves Hervé serving as an expert in three lower financial court hearings.

After hearing from factual witnesses, the court sided with NERA on the factual analysis. The case is expected to be settled out of court by the end of 2022, with a settlement favorable to the taxpayer.