 GermanyBjörn Heidecke ()
A chapter in Intangibles in the World of Transfer Pricing, 2021, pp 475-492 from Springer Abstract: Abstract Germany demands the use of the arm’s length principle in Section 1 of its Foreign Tax Act (“Außensteuergesetz—AstG”). It outlines a hierarchy of methods with a preference for the comparable uncontrolled price method, the cost-plus method, and the resale minus method. Only in cases where there is no reliable comparable third-party data available to apply one of these standard methods, the transactional net margin method or the profit split method can be applied. If those are also not applicable, the taxpayer needs to apply what is termed a hypothetical arm’s length test. This method assumes a hypothetical bargain is struck between a seller and buyer and with reference to economic methods determines the minimum ask price and the maximum bid price for a particular good or service. Two prudent independent business managers are assumed and the midpoint of this price range constitutes the default value. Arguments for other points within this spread can be provided when such a figure is more likely than the midpoint. The hypothetical arm’s length test was introduced as part of Germany’s “company tax reform,” and is applicable for financial years that started after December 31, 2007. Date: 2021 There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-319-73332-6_30 Ordering information: This item can be ordered from DOI: 10.1007/978-3-319-73332-6_30 Access Statistics for this chapter More chapters in Springer Books from Springer |
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