The Czech Supreme Administrative Court has recently issued its decision regarding a loss realized by a toll manufacturer due to low capacity utilization. The case involved a Czech taxpayer engaged in toll manufacturer services for its German principal. In determining the transfer pricing for the services, the Czech company used the cost plus method, with the services charged based on a budget without a year-end true-up. In 2008, the Czech company's capacity utilization was unexpectedly low due to poor market conditions, and as a result it was unable to absorb its fixed costs and realized a loss. However, the tax...