Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- Acknowledgements
- The Golden Bridge: analytical table of cases by topics in the OECD Guidelines
- Table of Cases
- Abbreviations
- Part I The context of transfer pricing disputes
- Part II North America and Europe
- 3 Transfer pricing disputes in the United States
- 4 Transfer pricing disputes in Canada
- 5 Transfer pricing disputes in the European Union
- 6 Transfer pricing in Germany
- 7 Transfer pricing in Spain
- 8 Transfer pricing disputes in the United Kingdom
- Part III Asia Pacific
- Part IV BRIC Countries
- Part V South America, Middle East and Africa
- Part VI Conclusion
- Index
- References
6 - Transfer pricing in Germany
from Part II - North America and Europe
Published online by Cambridge University Press: 05 November 2014
- Frontmatter
- Contents
- List of figures
- List of tables
- List of contributors
- Acknowledgements
- The Golden Bridge: analytical table of cases by topics in the OECD Guidelines
- Table of Cases
- Abbreviations
- Part I The context of transfer pricing disputes
- Part II North America and Europe
- 3 Transfer pricing disputes in the United States
- 4 Transfer pricing disputes in Canada
- 5 Transfer pricing disputes in the European Union
- 6 Transfer pricing in Germany
- 7 Transfer pricing in Spain
- 8 Transfer pricing disputes in the United Kingdom
- Part III Asia Pacific
- Part IV BRIC Countries
- Part V South America, Middle East and Africa
- Part VI Conclusion
- Index
- References
Summary
Introduction
This chapter provides an analysis of dispute resolution procedures in the area of international profit attribution as seen from the perspective of the Federal Republic of Germany. It will become apparent that in this country, differences of opinion existing with regard to transfer pricing can in many cases be resolved by means of a kind of consensus between the taxpayer and the tax authorities. There is a tradition of legal provisions designed to prevent international profit shifting using inappropriate contractual arrangements in the case of substantial participation in a foreign company. But the number of judgments actually handed down by the German Bundesfinanzhof (Federal Tax Court) dealing with ‘adjustment of income’ (section 1 of the German Foreign Tax Act) resulting from disputes in the area of international profit attribution is surprisingly low. Although the number of rulings with respect to ‘hidden profit distributions’ and ‘hidden capital contributions’ concerning a shifting of profits between a company and its shareholders in the primarily domestic scene appears infinite, in the international transfer pricing domain it is much more common for the taxpayer and the tax authorities to come to an agreement out of court (‘tax audit bazaar’). Such an agreement between taxpayer and tax authorities does not, however, guarantee freedom from double taxation. In order to prevent the occurrence of double taxation in this context, German taxpayers increasingly turn to the bi- or multilateral dispute resolution possibilities employing mutual agreement procedures and advance pricing agreements. Only in recent years has the German tax administration been giving these procedures their active support.
This chapter is structured as follows. After a brief round-up of the economic and institutional context of transfer pricing in Germany, section 6.3 will set out the historical background of the German transfer pricing rules. Section 6.4 sums up the main aspects of Germany's transfer pricing legislation. Against the background of these introductory considerations, the core topic of this contribution is dealt with in sections 6.5 to 6.7. The domestic approaches to resolving transfer pricing disputes in Germany are discussed in section 6.5,
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- Chapter
- Information
- Resolving Transfer Pricing DisputesA Global Analysis, pp. 188 - 246Publisher: Cambridge University PressPrint publication year: 2012
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