Article 9(1) of the OECD Model Restricts Income Adjustments Based on Formal Criteria

The German income adjustment provisions allow, in specific cases, for adjustments due to non-compliance with formal criteria. Tax audit adjustments are, therefore, regularly made regardless of whether or not they correspond to appropriate transfer prices. In a decision of 11 October 2012, the Federal Fiscal Court addressed the relationship of these provisions to article 9(1) of the OECD Model. This article provides an overview of this decision and its practical implications.