In the Bloomberg Fall Transfer Pricing Forum Managing Director Philip de Homont and Director Tom Braukmann share how German tax authorities select taxpayers for transfer pricing case audits based on internal risk considerations. Large multinational enterprises (MNEs) receive heightened scrutiny, lasting longer than smaller companies. Additionally, the authors share the technologies used for risk identification and what focus areas could lead to transfer pricing audits, including intercompany financing, relocations, and restructurings.

The authors discuss tax authorities’ approaches during transfer pricing audits such as compromises of previous audits and cancel contracts. They use two case studies to examine key elements considered by courts when deciding on transfer pricing-related disputes. Finally, they share how multinational enterprises can best prepare for potential disputes and what they can do to mitigate the risks of future disputes.