Germany is working to extend the deadline for taxpayers to submit transfer pricing documentation and simplify the process for audits. A new proposal aims to give taxpayers more time, changing the current 30-day requirement. Approved by Germany’s first chamber on September 26,2024, the Bill, supported by the Justice Committee, aims to reduce the bureaucratic burden.
The Bill is expected to streamline the submission process by focusing only on necessary documents. For instance, instead of submitting all records upfront, taxpayers would provide only key information needed to identify important areas for audit.
To learn more about proposed Bill, click here.
Germany’s Growth Opportunities Act, effective from January 1, 2024, highlights differences between German and OECD guidelines on intra-group financing. This has caused confusion for multinational companies on how to apply the new tax laws. In August 2024, Germany’s Finance Ministry released draft updates to clarify the arm’s-length principle, aiming to align more closely with OECD transfer pricing guidelines.
These updates bring several clarifications: refinancings are considered at arm’s length, borrowing for profit distribution is generally acceptable, and short-term investments of “capital buffers” in cash pools may also meet the standard under certain conditions. In addition, high-risk financing, such as in startups, isn’t automatically seen as a violation of the arm’s-length principle. The draft applies to cross-border intra-group financing agreements starting January 1, 2024, and extensions after December 31, 2023.
To access the details and specifics of the Draft, click here.
To access the details and specifics of the Growth Opportunities Act, click here.