International Taxation

New Guidance on Germany’s APA Programme for Transfer Pricing

An analysis by Flick Gocke Schaumburg, Taxand Germany 

 German tax authorities have revised their guidelines on Advance Pricing Agreements (APAs). The new guidance details the interpretation and application of APA rules, including reasons for rejecting APA applications such as the use of unilateral APAs, engaging in preferential tax regimes, or failing to cooperate during tax audits. However, the authorities have not set specific deadlines for completing the APA process.

APAs have become a popular instrument to obtain legal certainty on transfer pricing in Germany in recent years, reflecting the increasing complexity of transfer pricing faced by multinationals.

The new guidance largely reflects current practical experience for businesses and practitioners engaged in APA processes with the GTA. It contains helpful clarifications that businesses who are contemplating an APA process should be aware of. For one-time transactions (e.g., transfer of functions) it must be kept in mind that the application must be filed prior to realising those transactions.

Dr. Sven-Eric Bärsch and Dr. Sven Kluge from Flick Gocke Schaumburg, Taxand Germany, have analysed this move in further detail here.

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