Since their introduction in 2008, the German transfer of function rules have been a controversial peculiarity in the international tax landscape. In their new article, “Corporations in Germany Squeezed Between Sharpened Transfer of Function Regulations and DEMPE Contributions” published in the International Tax Journal, Senior Managing Director Yves Hervé and Principal Ronald Bernstein discuss the nexus between the transfer of function regulations that have changed between 2021–2023 and another recent change made to the German transfer pricing rules, namely the OECD’s extensive definition of intangibles and the related DEMPE and risk-control framework.

The updates tightened the tax regulatory environment regarding business relocations for German taxpayers and will likely lead to increased tax controversy and disputes. Dr. Hervé and Dr. Bernstein discuss these regulatory developments in Germany and the implications for taxpayers, particularly the tax audit implications, risk mitigation approaches, and the future of tax disputes in this field.