The Profit Split Method in Germany

01 April 2015
Dr. Alexander Voegele, Philip de Homont, and Tom Braukmann

This article from Bloomberg BNA's Transfer Pricing Forum examines the current German transfer pricing approach to the use of the profit split method. The authors address a number of issues, including official guidance on the application of the profit split method and its practical use by both taxpayers and tax administrations; scenarios in which the profit split method is most appropriate and commonly used; information useful in determining the arm’s length allocation under the profit split method; practical obstacles to obtaining or using this information, and limitations in the application of the profit split method.