Monday morning at 10 a.m. CET, the High Court of Eastern Denmark presented its verdict in a major principal tax case of Maersk and TotalEnergies against the Danish Ministry of Taxation.

The ruling is in favor of the companies, and the ministry gets a consolation prize, writes domestic newspaper Berlingske.

The case pertains to the Danish taxation of Maersk’s oil income from business in Algeria and Qatar during the period 2006-2016, and seeing as TotalEnergies took over Maersk’s oil activities in 2017, the case also affects the French oil major.

The verdict stipulates that ”the taxation authorities’ estimate was made on the wrong foundation,” and that the estimate, based on this foundation, is ”apparently unfair.” With this ruling, tax authorities miss out on added income of DKK 10bn (USD 1.48bn) while having to pay DKK 6m in legal costs.

Despite the apparent defeat, tax authorities are able to secure a smaller amount in extra income. The court has found that Maersk Oil & Gas in transactions with subsidiaries in Qatar and Algeria has acted in violation of transfer pricing rules on arm’s length.

The rules on arm’s length mean that transactions made internally at companies must take place at prices as if the parties were independent, rules meant to help prevent companies from relocating assets to reduce their tax obligations.

The income from the transfer pricing violations is unknown.

Minister of Taxation Jeppe Bruus told Berlingske that the ministry will examine the verdict in detail and consider whether to appeal the case to the Supreme Court.

English edit: Jonas Sahl Hollænder

Maersk, TotalEnergies clash with Danish tax ministry over billion-dollar sum