Germany: Increased rate for late payment interest rate on retroactive assessments effective January 1, 2027; other transfer pricing insights
Transfer pricing insights that may affect businesses in Germany
The Annual Tax Act 2026 increased the rate for late payment interest due on retroactive income tax assessments from the previous rate of 0.15% per month for periods from January 1, 2019, to 0.3% per month effective January 1, 2027.
In connection with the COVID-19 pandemic, the tax authorities had also deferred the start of the late payment interest accrual period and provided exceptions to the general loss carry-back rules for corporate income tax purposes (i.e., €1 million cap and one year limit) for years of assessment 2019-2024.
Taxpayers may be able to reach an agreement with the tax authorities during audits to allocate income adjustments in a way to enable taxpayers to take advantage of the lower late payment interest rate and loss carry-back exceptions available during those periods.
Read an August 2026 report prepared by the KPMG member firm in Germany
Other KPMG “German Transfer Pricing Insights” from August concern:
- Relevance of transfer pricing to S/4HANA implementations
- 2024 OECD MAP and APA statistics for Germany
- Practical guidance on benchmark studies, data availability, and financial updates