Ministry of Finance decrees non-applicability of Federal Tax Court decision re cross-border transfer pricing adjustment

The German Federal Ministry of Finance has published a letter instructing the tax authorities not to apply a recent decision of the German Federal Tax Court on the interpretation of Germany's general provision on the adjustment of cross-border transfer prices (letter of 22 July 2005, IV B 4 - S 1341 - 4/05). The letter is binding only on the tax authorities, but not on the taxpayers or the Courts. Details of the letter are summarized below.

In the case in question, a Ge…