Germany, as one of the leading countries in tax regulations, continues to face challenges in transfer pricing, especially in the context of the recent data on mutual agreement procedures (MAP) and advance pricing agreements (APA) published by the OECD. This article explores the key points of these statistics and how they impact multinational companies.
Context of MAPs and APAs
Mutual Agreement Procedures (MAPs) and Advance Pricing Agreements (APAs) are essential tools for resolving Transfer Pricing disputes and preventing double taxation. Germany, as an active member of the OECD, makes extensive use of these tools to ensure fairness in international transactions.
Main observations on MAPs
The most recent OECD report reveals that Germany is one of the countries with the highest number of active MAP cases. Among the highlights are:
- Increase in resolution times: Despite efforts to speed up the processes, many cases remain open for more than two years.
- High participation in complex disputes: Mainly related to intangible assets and high-value services.
- Success in favorable resolutions: Germany has shown a significant percentage of agreements that avoid double taxation.
Status of APAs in Germany
Regarding advance pricing agreements, the following is observed:
- Growing demand from companies: This reflects a greater need for fiscal predictability in international operations.
- Focus on complex transactions: Particularly in the technological and industrial sectors.
- Greater collaboration with the tax administration: Companies have prioritized establishing solid agreements before executing their operations.
Implications for companies
The data presented by the OECD and the observations in Germany underline the importance of adopting proactive strategies in transfer pricing. Among the key measures are:
- Evaluate the need for an APA for critical transactions.
- Prepare robust documentation to justify margins and methods applied.
- Be prepared to participate in MAP processes in the event of international tax disputes.
Conclusion
Germany continues to play a central role in the field of transfer pricing, and recent OECD data reflects both its achievements and the challenges it faces. Multinational companies must adapt to this regulatory environment and ensure robust compliance to avoid tax risks.
Call to action
At TPC Group, we have a specialized team to advise you on transfer pricing.
Source: Alvarez & Marsal
