Germany: Law on DAC7, submitting transfer pricing documentation in tax audits, adopted by lower house of Parliament

The measures intended to accelerate tax audits generally would apply for the first time to taxes arising after 31 December 2024.

The measures are intended to accelerate tax audits

The lower house of Parliament (Bundestag) on 10 November 2022 adopted the law on implementation of EU Council Directive 2021/514 [PDF 778 KB] (“DAC7”) and modernization of German tax procedures.

DAC7 would introduce an obligation for operators of certain digital platforms to provide the tax authorities with information on income derived by sellers through these platforms, which would be automatically exchanged between EU member states.

The law also would selectively modernize German tax procedures, particularly in connection with tax audits and in the area of digitization. With respect to transfer documentation specifically, the law 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 upper house of the German parliament (Bundesrat) still has to approve the law, and then it must be promulgated in the Federal Law Gazette.

In principle, the law would become effective 1 January 2023. The measures intended to accelerate tax audits generally would apply for the first time to taxes arising after 31 December 2024.

Read a December 2022 report [PDF 394 KB] prepared by the KPMG member firm in Germany 


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