The German Ministry of Finance released new administrative principles on transfer pricing, income allocation and tax audits on related-party structures. On Dec 3, 2020, the German government published its latest view on transfer pricing issues with regard to documentation, audit procedures, and income estimation. The Administrative Principles were published on the Ministry´s internet sites just a few moments ahead of the re-confirmation of a governmental official which stated that I would still be unclear as to whether the legal provisions of the ATADUmsG (Law on Implementing the EU Anti-Tax-Advoidance-Directive) will be approved the year 2020 by the Parliament or not.
The unclarity as to whether the Annual Tax Law package will be contain the provisions on the ATADUmsG was confirmed on Dec 4, 2020 in the course of an international conference (online). The new Administrative Principles “Verwaltungsgrundsaetze 2020” (IV B 5 – S 1341/19/10018:001) are to be published in the Federal Tax Bulletin (Bundessteuerblatt Part I) and will become effective thereafter. They refer to the old administrative principles of 2005, ruling key principles of the German government’s view on transfer pricing analysis, tax audits, and requirements of the taxpayer to cooperate in such audit. The document basically confirms the practitioner´s approach of recent years, and the provisions as set forth, among others, in Art. 90 III AO (Tax Procedures Act), GAufzV (Regulations on Transfer Pricing Issues incl. Documentation), Art. 1 AStG (Foreign Tax Act). No statement or reference is made with regard to ATAD issues and Pillar I or Pillar II issues discussed on the international level (OECD BEPS Project).
Should you have any questions on the new provisions and the impact on transfer pricing, feel free to contact us anytime.