Expert witness case study

What was the context?

A firm charged one of its subsidiaries, both based in major OECD economies, with a tax-deductible expense for a service. The Tax Authority contended that the firm was in fact paying itself a dividend. The firm argued that its subsidiary enjoyed a benefit for that service and that the expense reflected what the subsidiary would have paid if it had obtained the same benefit in an arm’s length transaction. This is when one of the Parties contacted SwissThink for expert witness support.

What did SwissThink do?

The SwissThink Expert reviewed the documents, researched databases to benchmark the case with similar situations and placed the facts through the lens of S&P and Moody’s analytical framework for Group relationships. Then he assessed the degree of parental support that an analyst at a major credit rating agency would have imputed to the subsidiary. This assessment would in turn inform the judge about the benefit received.

Was the benefit to the client?

Very quickly, notwithstanding the transaction complexity, the SwissThink Expert was able to provide a preliminary view to the Party engaging SwissThink. With his thorough command of the rating agencies’ methodologies, he developed an extensive report supporting the Party’s view. He also identified areas requiring hypotheses which could lead to alternative opinions.