In a recently published decision of 22 February 2008, the Financial Court of Münster (Finanzgericht Münster) held that Sec. 1(1) of the Foreign Tax Act (FTA), on the adjustment of income is incompatible with EC law. The decision is similar to an earlier decision by the Financial Court of Düsseldorf. Details of the decision are summarized below. (a) Facts. The case concerned a German resident corporation, which held participations in various Dutch companies. The plaintiff granted one of the Dutch companies an unsecured loan. When the Dutch company became impecunious, the plaintiff depreciated the loan to its going concern value....