What's new in Germany
The Growth Opportunities Act (Wachstumschancengesetz), which
came into force on 28 March 2024, brings significant changes to the
transfer pricing rules for intercompany financing relationships, as
outlined in Sections 1(3d) and 1(3e) of the AStG (German Foreign
Tax Act). These new rules aim to combat profit shifting through
inappropriate financing arrangements by refining the application of
the arm's length principle to cross-border financing
transactions.
The Federal Ministry of Finance (BMF) published a draft for the
revision of the administrative regulations on transfer pricing
principles on 14 August 2024 ("BMF draft regulations"),
to deal with the new rules. The administrative regulations are only
binding for the tax authorities, not for the taxpayers, and present
the German tax administration's interpretation of the new rules
and has significant meaning for the German TP practice.
