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Germany: Discussion draft, transfer pricing documentation requirements

Germany: Transfer pricing documentation requirements

New documentation requirements for transfer pricing were introduced in Germany with legislation on the implementation of the amendments to the EU administrative assistance directive and further measures against base erosion and profit shifting (Anti-BEPS-I law). The law provides for a three-tiered approach to transfer pricing documentation:


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  • Standardized information (Master file)
  • Local and entity-specific (Local file)
  • Documentation related to activities in a specific country (country-by-country (CbC) reporting)

The federal ministry of finance (BMF) recently published a discussion draft for amending the rules currently in effect, and to take into account the changed legal situation due to the newly introduced Anti-BEPS-I law. The structure of the transfer pricing documentation is to be adapted so that a differentiation is made between Local file and Master file. 

The revised measures would be applicable for assessment periods 2017 onwards. The effective provisions would simultaneously repeal the previous ordinance.


The discussion draft contains three material changes:

  • An analysis would now required of key functions and important risks, comprising a weighting and/or description of how such risks or functions are allocated. Quantitative evidence must be provided regarding which party in a transaction actually assumed which function and which risk. This is intended to rule out subjective and unverifiable assessments.
  • When the taxpayer uses comparables for determining transfer prices, it is required to make the search process fully transparent and to document the configuration of the company database. The reason is to enable the tax authorities to verify and reproduce the search process performed by the taxpayer.
  • A new section regarding Master file and an attachment specifying the scope of the Master file has been included. The attachment contains the elements to be covered by the Master file such as, among other things, the organizational structure, description of supply chains, principal service agreements, a brief functional analysis, important restructuring transactions, and overall strategy for intangibles and intercompany financial activities.


Read an April 2017 report [PDF 322 KB] prepared by the KPMG member firm in Germany

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