Germany: Implications of new obligation to correct tax returns on transfer pricing issues
Transfer pricing insights that may affect businesses in Germany
Under newly introduced Section 153 (4) AO, the obligation of taxpayers in Germany under Section 153 (1) AO to immediately report incorrect or incomplete tax returns leading to a tax reduction has been extended to situations in which an external auditor makes adjustments to a taxpayer’s tax return in connection with a tax assessment notice that would arguably require the amendment of other tax returns that were not the subject of the external audit. Section 153 (4) AO applies to all taxes arising after December 31, 2024, as well as to all tax periods for which an audit order is issued from January 1, 2025, which means that tax periods prior to 2025 are also affected by the new rule.
It is unclear whether Section 153 (4) AO also includes an obligation to make corrections or updates in future tax periods and thus whether it is still possible to reach an agreement in connection with a tax audit on transfer pricing issues that can be legally limited to the current tax audit period.
Read a May 2025 report* prepared by the KPMG member firm in Germany that provides an overview of the new requirements under Section 153 (4) AO and highlights practical aspects of the application of Section 153 (4) AO to transfer pricing issues.
*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.