Top Czech Court Bars Eli Lilly’s Deduction of Non-Tax Costs

A top Czech court rejected deductions of a variety of non-tax costs incurred by a Czech subsidiary of Eli Lilly & Co. and reinvoiced with a small markup to the group.

Czech tax rules allow for some non-tax costs to be recognized as tax deductible, but only if the taxpayer can demonstrate those costs have a “direct connection” to generated income, the Czech Republic’s Supreme Administrative Court ruled Friday.

The decision of the court is final.

Eli Lilly ČR, s.r.o. was contesting a total of 5,279,720 Czech koruna ($254,923) in additional tax assessments for 2013 and 2014, as well ...