KPMG Germany Webpage
Click on the above link to visit the KPMG Germany webpage on the Mondaq website

Mr Alexander Vögele

See disclaimer and notice of copyright at the end of this article

In August 2000, Germany issued proposed regulations governing transfer pricing documentation requirements and other procedural matters. In mid-April 2001, a revised draft (dated March 2001) was forwarded by the Federal Ministry of Finance to the tax authorities of the German states. The March 2001 draft has not been released to the public and was not available as of the editorial date of this article (30 April 2001). The German national and state tax authorities are known to be in substantial agreement on the terms of the regulations, which satisfy most states, but apparently do not go far enough for some.

The August 2000 draft of the proposed regulations is the subject of articles 211 and 212. Adoption of the August 2000 draft with some rewording, but without material changes, appeared probable and imminent at the time these articles were written.

According to unofficial information, the primary difference between the August 2000 draft and the still confidential March 2001 draft is that the latter no longer requires contemporaneous preparation of special transfer pricing documentation. The regulations are still in a state of flux, however.

Taxpayers are advised to follow the drafting process closely, all the more as the proposed regulations contain no transition provisions and, once finalised, will apply in principle to all open audits.

The draft transfer pricing documentation regulations should be seen in the broader context of Germany's efforts to modernise its transfer pricing machinery to better defend its share of tax revenues in a global economy. The other noteworthy developments in this context are:

  • issuance of new cost-sharing regulations in December 1999 (see article no. 200)
  • enactment of "electronic audit" provisions as part of the summer 2000 tax reform package and issuance of draft implementing regulations (see article 213).

A translation of the August 2000 draft transfer pricing documentation regulations is available upon request.

Disclaimer and notice of copyright

This article treats the subjects covered in condensed form. It is intended to provide a general guide to the subject matter and should not be relied on as a basis for business decisions. Specialist advice must be sought with respect to your individual circumstances. KPMG Germany in particular insists that the tax law and other sources on which the article is based be consulted in the original, whether or not such sources are named in the article. Please note as well that later versions of this article or other articles on related topics may have since appeared on this database or elsewhere and should also be searched for and consulted. While KPMG Germany's articles are carefully reviewed, it can accept no responsibility in the event of any inaccuracy or omission. Please note the date of each article and that subsequent related developments are not necessarily reported on in later articles. Any claims nevertheless raised against KPMG Germany on the basis of this article are subject to German substantive law and, to the extent permissible thereunder, to the exclusive jurisdiction of the courts in Frankfurt am Main, Germany. This article is the intellectual property of KPMG Germany (KPMG Deutsche Treuhand-Gesellschaft AG). No use of or quotation from the article is permitted without full attribution to KPMG Germany. Distribution to third persons is prohibited without the express written consent of KPMG Germany in advance.