24.3 Relevant Principles to Derive the Arms Length Price 24-9 whether the transfer price under those conditions is determined in compliance with the prudent business manager standard or with the arm's length standard The structure chosen by the taxpayer might be recharacterized only if it deviates from the economic substance of the transaction or if it falls under the antiabuse provision of section 42 of the German General Tax Code (Abgabenordnung) Sec tion 42 of the German General Tax Code applies if the taxpayer chooses a particu lar structure solely to avoid taxation and if this structure itself is unreasonable in the face of the object of the structure. This might be the case, forinstance, in a trans action involving an interposed company that has no economic function and leads to an unnecessary and artificial complication of a transaction. Afurther exception to the above mentioned principle might be seen in section 8a of the corporatie Tax Code--Germany's thin capitalization rule. Under this provision, it is possible to recharacterize interest payments in distributions c) Range of Prices Market conditions are often not completely transparent and may create uncer tai ren in transactions between unrelated parties. Therefore, due to the lack of price information that can be observed in the market, a range of prices exists rather than one single price. The OECD often refers to the fact that transfer pric ing is not an exact science and in many cases it would therefore not be possible to determine a single arms length price, but rather to determine a range of accept able prices. This principle is very important in the determination of transfer prices because it allows the prudent business manager to be more flexible in set- ting prices The concept of price ranges is also accepted by the German Tax Administra- tion. The Tax Administration normally can not challenge transfer prices that are within the market-derived price range if independent parties doing business in the same or a similar market negotiate their prices for individual transactions on a case-by-case basis within that range. However, this approach will be disallowed in two situations 1. Related parties use this flexible range-of-prices approach in such a way that he parties systematically determine the prices to be charged between them to be at the upper or lower limits of such a range 2. There is no commercial justification for this"consistent"approach The artificially deflated profits of the disadvantaged corporation will be ad- justed accordingly. Thus, the notion of flexibility becomes not only a shield of See, for example, Federal Tax Court, January 28, 1992, BStB1. II 1993, P 84: Federal Tax Court dated March 5 1986,BSB1,Ⅱ1986,p.496 tSee OECD Guidelines 5 1.45 2 Administrative principles s 2.1.9, exampl