Beginning in 2022, three fundamental aspects of Germany’s Foreign Tax Code will be modified. While some of these changes were expected and will better align German transfer pricing audits with the OECD Transfer Pricing Guidelines, other shifts could result in a new wave of disputes as tax authorities apply the new standards.

Managing Director Dr. Yves Hervé and Director Philip de Homont recently published an article in International Tax Review titled “German 2021 Transfer Pricing—A Fundamental Shift in the German Transfer Pricing Landscape.” As well as providing an outlook on what to expect from the German tax authorities after the changes to the Foreign Tax Code, the authors explore:

•  The fundamental changes in the Foreign Tax Act;
• Transfer pricing method selection and applicability;
• The DEMPE concept and definition of intangibles; and
• The relocation of functions/hard-to-value intangibles

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