Letter from the German Federal Ministry of Finance (BMF) dated August 14, 2024, regarding the revision of the 2023 Administrative Principles on Transfer Pricing from June 6, 2023 (VWG VP), concerning intra-group financing relationships (Chapter III. J. of the VWG VP) due to the amendment of § 1 AStG.
This revision draft aims to ensure that the relevant tax regulations are adhered to in financing relationships between related parties. This includes a detailed analysis of functions and risks to correctly allocate income.
The key points of focus are:
- The basic nature of financing relationships
- arm’s length assessment
- Standard interest rate
- Financing relationships as low-function and low-risk services
The original draft can be downloaded for viewing from the BMF website at https://www.bundesfinanzministerium.de/Content/DE/Downloads/BMF_Schreiben/Internationales_Steuerrecht/Allgemeine_Informationen/2024-08-14-ueberarbeitung-verwaltungsgrundsaetze.html