Perrigo Secures $89.2M in Transfer Pricing Dispute
What’s at Issue:
Perrigo Co. prevailed in a long-running Section 482 dispute after the IRS alleged its transactions with an Israeli affiliate lacked economic substance and improperly shifted income outside the U.S.
The IRS reallocated income to U.S. entities and assessed taxes, penalties, and interest.
Current Result
- A federal court awarded Perrigo $89.2 million in overpaid taxes, interest, and penalties (less than the $143M sought).
- The court rejected the IRS claim that the transactions lacked economic substance.
- Final judgment followed a prior ruling largely in Perrigo’s favor.
This represents another significant taxpayer win in complex transfer pricing litigation.
What Companies Should Be Doing
- Ensure intercompany transactions demonstrate clear economic substance.
- Align transfer pricing policy with actual conduct.
- Maintain robust Section 482 documentation.
- Prepare for long audit cycles—this case spanned more than a decade.
Expectation: The IRS will continue challenging cross-border structures, particularly where significant profits are allocated abroad.
