New Regulations for Transfer Pricing Documentation in Germany

From AGN EMEA Tax Committee members and AGN tax correspondents

In Germany, the EU Directive DAC7 has been implemented and included as part of the German tax law. How could the shortened submission deadlines and extended penalties affect you?

In general, transfer pricing documentation must be prepared in accordance with the German Regulations Regarding the Documentation of Profit Allocations (GAufzV).

There is only relief for smaller companies for IC-deliveries up to EUR 6 million and for other IC- services (especially services) up to EUR 0.6 million, which in each case, is related to the group of companies.

Present Regulations:

• Submission within the framework of the external audit after a request by the tax audit.
• Deadline: 60 days for ordinary IC-business transactions and 30 days for extraordinary IC-business transactions.
• Late submission: Surcharge of at least EUR 100 per day up to a maximum of EUR 1 million if the deadline is not met. If the documentation is not submitted on time or if the documentation is unusable, a surcharge of 5 to 10 per cent of the income adjustment may be levied.

New Regulations:

• The deadline is shortened to 30 days for all IC-business transactions.
• The transfer pricing documentation can also be requested at any time, i.e. even outside of the external audit.
• Valid for tax periods beginning after 31.12.2024; also valid for taxes and tax refunds arising before 1.01.2025 and for which an audit request is announced after 31.12.2024.

As a further tightening, a duty to cooperate on the part of the taxpayer can be legally demanded by the tax audit.

Requested receipts and documents must be submitted within one month. If the request is not fulfilled within the one-month period, a “delay fee” of EUR 75 for each full calendar day of the delay in cooperation (but for a maximum of 150 calendar days and thus a maximum of EUR 11,250) is mandatory.

However, if the turnover of the audited company in an audit year amounts to at least EUR 12 million or if the consolidated turnover of the group amounts to at least EUR 120 million, the tax authority may impose further surcharges of up to EUR 25,000 per day (for a maximum of 150 days and thus a maximum of EUR 3.75 million).

Tax Committee members and AGN tax correspondents are available
to answer your questions!

If you have any questions regarding corporate income tax and transfer pricing in Germany, please contact Christine Ries.

Christine Ries
Tax Consultant | Certified Advisor in International Taxation
WirtschaftsTreuhand GmbH

rocco.arcidiacono@fiduciariamega.ch