Germany: Draft legislation on implementation of DAC7 and modernization of tax procedures law

Proposed to become effective 1 January 2023

Modernization of tax procedures law

The Federal Ministry of Finance (BMF) published draft legislation on the implementation into German law of EU Council Directive 2021/514 (“DAC 7”) and the modernization of the tax procedures law.

The draft legislation is proposed to become effective 1 January 2023.


DAC7 introduces an obligation for operators of certain digital platforms to provide the tax authorities with information on income derived by sellers through these platforms. This information will be automatically exchanged between EU Member States.

Tax procedures modernization

Under the draft legislation, the German tax procedures law would be modernized, particularly in connection with tax audits and in the area of digitization. Both are projects agreed on by the governing parties in the coalition agreement.

With respect to transfer documentation specifically, the draft legislation would provide that in the event of a tax audit, transfer pricing documentation must invariably be submitted (i.e., without separate request by the tax authority). In addition, the deadline would be shortened to 30 days from the date of the disclosure of the audit order instead of 60 days.

Next steps

The draft legislation will be forwarded to the upper house of the German parliament (Bundesrat) for consideration and then to the lower house of the German parliament (Bundestag) for consideration. Thus, it is possible that amendments to the draft legislation will be made.

Read an October 2022 report [PDF 259 KB] prepared by the KPMG member firm in Germany 


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