Germany: Increased tax audit scrutiny on intra-group data centers

Issues of focus include transfer pricing methodologies and creation of permanent establishment (PE)

The German tax authorities, particularly the Federal Central Tax Office (Bundeszentralamt für Steuern, or BZSt), have increased their scrutiny on the operations of intra-group data centers located in Germany, primarily focusing on two issues:

Transfer pricing methodologies applied for intra-group compensation related to the provision of computing capacity (including server capacity)
Whether the use of computing capacity in a German data center creates a permanent establishment (PE) for foreign content providers

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.

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Germany: Increased tax audit scrutiny on intra-group data centers

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