The German government has been working on drafting Advance Pricing Agreements (APAs) guidelines for many years, producing the first draft guidelines in 2000 and releasing a circular for bilateral and multilateral APAs in 2006. In this article from Transfer Pricing International Journal, NERA Special Consultant Dr. Alexander Voegele and former Analyst Chunyu Zhang explain why APAs are increasingly necessary for gaining security in complex situations, particularly when business models are revised and when functions, risk, and intellectual property are relocated to other countries. APAs have proven very helpful in cases of unexpected events, such as the recent economic downturn. The authors note that the most important effect of an APA is the creation of fairness and a trusting relationship between taxpayers and tax authorities. Since the prevailing economic structures of today have made it impossible to take each possible change into account in the APA program, an APA can therefore only be successful if all parties are willing to act in the spirit of the agreement.