Transfer Pricing End-of-Year Adjustments in Germany

While the transactional net margin method including transfer pricing adjustments at quarter-end or year-end is commonly applied by German taxpayers, there are some pitfalls from a German corporate income tax, VAT and custom perspective. German tax auditors and customs auditors are likely to investigate those transfer pricing adjustments more closely. Transfer pricing adjustments at quarter-end or year-end, however, can still be successfully managed in Germany, also during German tax audits.