The Impact of Article 9 of the OECD Model on German Taxation

This article describes recent case law of the German Federal Tax Court on the relationship between article 9(1) of the OECD Model and German domestic tax law that demonstrates a clear trend towards denying income adjustments under domestic law pursuant to article 9(1). Taxpayers need to be aware of the impact of this provision, in particular, on the application of the transfer pricing rule, section 1 of the Foreign Transactions Tax Act, and on hidden distributions.