Effective January 1, 2025, new and stricter transfer pricing documentation requirements and submission deadlines became effective for German taxpayers. Particularly, the deadline for submission has been reduced from 60 days to 30 days upon announcement of a tax audit, effectively introducing a mandatory submission requirement during tax audits. Additionally, a new documentation requirement, the so-called Transaction Matrix, has been implemented.
Implications
Due to the short submission deadline, corporates with entities in Germany should ensure that transfer pricing documentation is regularly updated and available for submission. Particularly, corporates with fiscal years that have not yet been audited should prioritize preparing the necessary documentation as these periods will already be subject to the new and shortened submission deadline.
In Detail
The new regulations are applicable for all tax audits starting on or after January 1, 2025, and will therefore impact past fiscal years that have not yet been audited. Upon the announcement of a tax audit, taxpayers are obliged to submit the following documents within 30 days of the audit announcement, without any specific request from the authorities:
- Group Master File (if applicable)
- Transaction Matrix
- Documentation of extraordinary business transactions
The transaction matrix is a new requirement and should generally include the following information:
- Type of transaction
- Parties involved
- The relevant tax jurisdiction
- Transaction volumes
- Contractual basis
- Transfer pricing method applied
- Any special tax regime considerations
If requested separately during an audit, a local file has to be submitted within 30 days of the request as well.
Note that for fiscal years starting from January 1, 2025, transfer pricing documentation may also be requested by the tax authorities in other proceedings, for example an Advance Pricing Agreement (APA) application or a customs audit. In these cases, the submission deadline of 30 days also applies.
Kroll can help you ensure that appropriate transfer pricing documentation in line with the new German rules and OECD guidelines is in place.
