As the largest economy within the EU, Germany hosts a number of multinational enterprises that conduct an increasing number of cross-border migrations of business functions. In this article from International Tax Review’s Intellectual Property Supplement, NERA Special Consultant Dr. Alexander Voegele and former NERA Consultant Dr. Stefan Lutz examine new German guidelines that concentrate on the object of a migration—the transfer package—and its profit potential. The authors warn that the impact of these guidelines should not be underestimated, as recent experience demonstrates that every cross-border migration of a business function affects relevant taxable income to a different degree. To determine the true market value of any particular transfer of business functions, individually sound economic reasoning and analyses are required.

This article first appeard in the fifth edition of International Tax Review’s Intellectual Property supplement. For more information, please visit www.internationaltaxreview.com.