On 31 May 2018, a judgment of the Court of Justice of the European Union (CJEU) was issued concerning whether German law on arm's length pricing complies with the EU freedom of establishment principle and the principle of proportionality.
The case involved German-based Hornbach-Baumarkt AG, which provided guarantees (comfort letters) in relation to loans received by two of its indirectly wholly-owned subsidiaries in the Netherlands. The guarantees included that Hornbach irrevocably and unco…