In a recent case of the Federal Tax Court Germany, the GTP® TEAM was involved with its expertise (BFH Court case I R 54/19; hearing on Aug. 09, 2023). The GTP® TEAM reviewed the arm’s length analysis judged by the lower court by means of alternative perspectives looking at the value chain in which the taxpayer entity was involved. Dr. Markus Brem: “In May 2020, we were asked by our colleagues from MOORE Global network to contribute with our expertise to the proceedings on appeal on questions of law at the Federal Tax Court. The question was brought forward on the arm’s length character of the transactions. We were able to show that only performing the arm’s length test using the cost plus method, as deployed by the taxpayer for calculating transfer prices, was insufficient. We could elaborate that other transfer pricing methods confirm the arm’s length character of income allocation.” By means of applying benchmarking approaches across the full value chain of the multinational group, it could be shown that profit allocation was not to the burden of the German tax revenues. The court decision is forthcoming and expected within the next days.
