Germany’s stricter rules on intercompany financing: One year in
Germany’s stricter rules on intercompany financing: One year in
What Luxembourg-based investment firms and multinationals need to know
ONE YEAR LATER: WHERE DO WE STAND?Germany’s updated transfer pricing rules for intercompany financing are now fully in effect, raising the bar for compliance across multinational and investment structures. Tax authorities are intensifying audits, reviewing not only documentation and compliance with the stricter rules but also whether financing terms align with legal and economic substance. Despite the administrative guidance issued late in 2024, practical uncertainties persist, and taxpayers must now proactively defend their positions to withstand increased audit scrutiny and navigate interpretive uncertainties. The absence of thresholds, safe harbors, or minimum standards adds to the burden, especially for smaller transactions or taxpayers.