New Guidance On Germany's APA Programme For Transfer Pricing Purposes

The German tax authorities (GTA) have updated their administrative explanations on Advance Pricing Agreements (APAs) providing guidance on how they interpret the APA legislation and operate the German APA Programme. Of particular note are GTA's clarifications about the rejection of the APA application (in case of e.g. unilateral APAs, utilizing preferential tax regimes or non-compliance with duties to cooperate during tax audits, late fee payment). Unfortunately, the GTA has still not provided any specific timing targets for completing the APA process.

Key Clarifications

No Admission of Unilateral APAs

Consistent with our practical experiences, GTA explicitly confirm that in cases involving a tax treaty partner businesses must first seek an APA on a bilateral basis before seeking a unilateral APA. Moreover, unilateral APA shall not be issued in cases of transfer prices and the profit allocation of branches.