Transfer pricing rules for transactions involving low-tax countries : Germany

In principle, although German transfer pricing rules do not draw any distinctions based on the effective tax levels in the country of residence of a non-resident contracting party, German tax law includes a number of rules which aim at reducing tax benefits of foreign direct investment in low-tax jurisdictions. This article focuses on the general anti-abuse rule and the CFC rules, as well as a number of changes to the respective rules that have been enacted or are currently under discussion in Germany.