Germany: Transfer pricing documentation requirements for extraordinary business transactions in 2025
New rules require automatic submission within 30 days of transfer pricing documentation upon notification of an audit
Significant changes to transfer pricing documentation requirements in Germany became effective January 1, 2025 (read TaxNewsFlash), including a requirement to submit transfer pricing documentation for both extraordinary and ordinary business transactions within 30 days of receiving notification of a tax audit.
Extraordinary business transactions
The term extraordinary business transaction (EBT) is an undefined legal term in German tax law, but generally EBTs are understood to mean the opposite of ordinary business transactions, often resulting in substantial changes in income. The following are examples of EBTs under German tax law:
- Conclusion or modification of a long-term agreement that significantly affects the taxpayer’s income from intra-group business relationships
- Asset transfers as part of business restructuring measures
- Transfer or provision of assets in connection with significant changes in functions and risks within the company
- Business transactions related to a significant change in business strategy relevant to transfer pricing
- Conclusion of cost allocation agreements
Transfer pricing documentation requirements for EBTs
Unlike transfer pricing documentation for ordinary transactions, EBTs require proactive and contemporaneous documentation within six months following the fiscal year in which an EBT occurs. In addition, while ordinary transfer pricing documentation could be prepared and submitted within 60 days of a request from the tax authority, extraordinary transfer pricing documentation had to be submitted within 30 days of a request from the tax authority. Now, both ordinary and extraordinary transfer pricing documentation must be submitted within 30 days of a request from a tax authority, and both must also be submitted automatically within 30 days of a notice of a tax audit.
Read a March 2025 report* prepared by the KPMG member firm in Germany
*This report is one in a series prepared by the KPMG member firm in Germany. Read more on “German Transfer Pricing Insights,” covering transfer pricing topics that may affect businesses in Germany.