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

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

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April 4, 2025

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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