Insights

Germany Publishes Newly Updated Administrative Guidance on Transfer Pricing

Sven-Eric Bärsch 16 Jan 2025

An overview by Flick Gocke Schaumburg, Taxand Germany

Germany’s Federal Ministry of Finance recently issued updated Administrative Principles TP 2024, replacing the 2023 version. These will apply from the 2024 assessment period onward, with the 2023 version still applicable to earlier cases. Key updates include:

• Simplified Transfer Pricing (Amount B): Based on OECD guidelines, fixed operating margins for low-risk distribution activities will be optional from 2025, requiring transactions with covered jurisdictions and applicable tax treaties.
• Employee Secondments: The arm’s length principle applies to temporary workers, replacing previous guidance.
• Intercompany Financing: Clearer rules on debt capacity, interest rates, and sustainability. Adjustments for existing loans are allowed until 31 December 2024.

The updates provide clearer, less restrictive guidance, especially for financing relationships. Companies should ensure compliance with the new rules for intercompany financing and evaluate the application of simplified net profit margins to avoid risks of double taxation.

Sven-Eric Bärsch and Hendrik N. Schmidt from our German member firm Flick Gocke Schaumburg have provided a more detailed overview, which can be read here.

Article tags

Germany | OECD | Transfer Pricing