Cross-border business restructurings play a central role in multinational enterprises. They often entail the relocation of functions from one tax jurisdiction to another and the shift of business profits between these countries, often to the detriment of the former tax jurisdiction. In 2008, the German legislature adopted business restructuring (i.e. OECD Guidelines Chapter IX) transfer pricing rules.
The relocation of functions regulations aim at safeguarding tax revenue on profit potential arising from functions that are relocated abroad and whose value contributions are thereby withdrawn from German taxation. These rules and their interpretation have since been continuously developed by the German tax legislature and are considered a…
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