New Regulations on § 1 AStG and Administrative Principles on Transfer Pricing

With amended regulations on § 1 AStG and Administrative Principles on Transfer Pricing, a lot of former regulations have been disposed of. A good chance to revise your transfer prices. Here are some instructions on what to observe.

DEMPE function:

Paragraph 1 of the German Law to prevent international fiscal evasion has now adopted the regulations of the OECD on intangible assets based on the so-called DEMPE function. Check the compliance of your current transfer prices on intangible assets and thoroughly document your result. If need be, change your transfer prices accordingly and in a timely manner, as the new regulations have to be applied to all open cases.

Reference to the OECD Transfer Pricing Guidelines:

The German transfer pricing guidelines are now taking direct reference to the OECD transfer pricing guidelines. Assuming this signals an international uniform approach, it is worthwhile to check your transfer prices in that respect (e.g. risk-control-approach). As the OECD transfer pricing guidelines are regularly used in international arbitration proceedings (e.g. mutual agreement procedures), it might be worthwhile to focus the revision on topics, which under local law are regulated differently.

Time frame of a two-sided adjustment of damages:

The so-called two-sided adjustment of damages is no longer limited to the three following financial years. The adjustment of damages is now more flexible.


With the amended regulations on German law to prevent international fiscal evasion it looks like the German federal ministry of finance is strengthening the use of the OECD transfer pricing guidelines not just in international arbitration proceedings but also in local application of transfer pricing regulations.

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