Incorrect or not (correctly) documented transfer prices can lead to these very unpleasant consequences in Germany:
– Tax arrears payments by estimates of the tax office
– Reversal of the burden of proof
– High interest for back tax payments for previous years
– Surcharge of up to 1 million €.
In order to avoid disadvantages, all companies exchanging goods or services with affiliated companies across the border should ensure that they are adequately remunerated. To this end, the conditions must be negotiated in advance by the parties involved as between third parties and, if necessary, recorded in a contract and separate documentation. We will be happy to support you in this.
Please find here our video about Transfer Pricing Issues in Germany
Our services in the field of transfer pricing in international tax law
Checking of transfer pricing obligations of internationally operating companies
If your German company has a parent or sister company, a subsidiary or permanent establishment abroad, the question arises at the beginning and beginning of each new financial year whether you are obliged to prepare transfer pricing documentation and submit it to the tax office. We will be happy to check this for you and tell you within what time limits it may have to be drawn up and what it should look like. We have compiled some basic information on transfer pricing documentation for you here. Even if you are not obliged to do so, you should prepare how to prove to the tax office that your transfer prices are at arm’s length.
Preparation of your transfer pricing documentation
We will be happy to prepare your transfer pricing documentation for you. It is often overlooked that transfer pricing documentation prepared under foreign law or in a foreign language is usually rejected by the German tax authorities. Applications must be submitted in good time.
Transfer pricing documentation includes factual documentation (who in the group has what relationships with whom and to what extent) and documentation of appropriateness (the transfer prices selected correspond to what third parties would have agreed). Various transfer pricing methods can be considered, which we have listed for you here.
Depending on the transfer pricing method chosen, the proof must be provided in different ways. Since suitable external data is not always available, databases are sometimes used. To ensure that you are on the safe side, we use the same database that is used by the German tax authorities.
Checking your transfer pricing documentation if the tax audit has already been announced
If you are unsure whether the transfer pricing documentation prepared by you or your tax advisor meets the requirements of the tax authorities, we will be happy to check it for you. If something is missing, we will supplement the missing parts or create a completely new documentation. This can save a lot of money, especially if a transfer pricing documentation is prepared for the first time, extraordinary business transactions such as the conclusion of a new intra-group agreement or the establishment, change or closure of business areas have occurred.
Support during tax audits, in particular when a specialist auditor is called in for foreign matters.
If, in the course of a tax audit, questions are asked about international issues or transfer prices and your tax advisor explains to you that he is no longer able to provide you with professional support, or that you notice yourself that your advisor is not at home here, you are welcome to consult us as specialists in international tax law. This is particularly the case if a specialist auditor for foreign matters is called in during an ongoing tax audit or if a lot of money is involved.
On request, we only deal with tricky international tax issues and do not interfere in discussions about other findings and questions of the tax audit which your “house and court tax consultant” has under control. In this case, our specialist advisors in international taxation or tax professors are almost exclusively active, who can adequately stand up to the expert examiner. Click here for more information regarding audits.