Citizen Media Watch

november 30th, 2020

Advance Pricing Agreement Deutschland

Posted by lotta

Are pre-price agreements with tax authorities possible in your jurisdiction? If so, what form do they generally take (for example. B, unilaterally, bilaterally or multilaterally) and what companies and transactions can they cover? Under German law, a pre-price agreement (APA) is a combination of a prior agreement between the federal states on the transfer price between internationally linked companies and an expanded obligation based on it. At the end of the APA, the participating countries determine the method of transfer pricing to be applied for a fixed period in the future between the related companies or certain parts of the companies concerned. This is an administrative procedure based on requirements. A Pre-Pricing Agreement (APA) is a procedural agreement between one or more tax payers and one or more tax authorities, which aims to avoid transfer pricing disputes by pre-defining a set of criteria for certain cross-border controlled transactions within a specified time frame, to ensure that they respect the length-of-arm principle. As a general rule, an APA with the German tax authorities only becomes valid if the taxpayer agrees with the APP and waives its right to appeal tax rulings, as long as these tax rulings are in accordance with the agreement described in the APP. After the APA takes effect and at the request of the subject, the tax office must adopt a binding decision reflecting the APA agreement. Companies that wish to avoid the threat of double economic taxation in advance can apply for an APA. In Germany, the Bundeszentralamt for Steuern (BZSt) is responsible for the implementation of these procedures.

Applications to open an APA can therefore be filed directly with the BZSt. The main benefits of an APA include: – the prevention of tax controls for APA-covered transactions (reducing costs and related efforts) and eliminating any transfer pricing adjustments: – removal of late interest and penalties for possible transfer pricing adjustments; Eliminating the costs of establishing the transfer pricing record for APA-covered transactions (during the period during which the APA is in effect); Avoid double taxation. The double taxation agreement is available on the website of the Federal Ministry of Finance. Here are the models of applicants` declarations that the applicant must submit to the authorities after the signing of the pre-price agreement. Backgrounder on bilateral or multilateral pre-agreement procedures The applicant determines in his application the content of the APA. The application must define the scope of both time and substance. In addition, it is worth mentioning the other countries with which a pre-agreement on transfer pricing is to be concluded. If an applicant requests a multilateral APA (with more than two participating states), the APA consists of several bilateral APAs.

Following the signing of the pre-price agreement with the State or foreign countries, BZSt informs the applicant in writing of the result and asks him to approve the content of the agreement. In addition, the applicant is asked to waive his right of appeal to the tax office. Once the applicant has agreed to the content and waived his right of appeal, the tax office grants the applicant the corresponding mandatory prior obligation to implement the pre-transfer prices at the national level.




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