GERMANY Law and Practice Contributed by: Michael Best, Gerald Herrmann and Jannis Lührs, POELLATH
• a country-specific country-by-country report. The information exchange standards and reporting obligations arising from the amendments to the EU Mutual Administrative Cooperation Directive have also been implemented into German law. The amended transfer pricing documentation rules are applicable for fiscal years starting after 31 December 2016. BEPS Action 5 As of 1 January 2017, tax rulings (ie, advance cross- border rulings and advance pricing arrangements) issued, reached, amended or renewed after 31 December 2014 must automatically be exchanged amongst EU member states. These amendments take the recommendations made in BEPS Action 5 (Meas - ures to Counter Harmful Tax Practices) into account. Furthermore, Germany has introduced a provision to limit the tax deductibility of licence fees or royalty payments to foreign-related parties that benefit from preferential tax regimes (such as intellectual property, licences or patent boxes) that are incompatible with the OECD nexus approach of BEPS Action 5 (Meas - ures to Counter Harmful Tax Practices). In addition, the BEPS 1 Implementation Act intro - duced a new regulation into domestic law to prevent the double taxation of business expenses (ie, double deduction) for partnerships, effective from 1 January 2017. OECD Multilateral Instrument Germany also signed the OECD Multilateral Instrument (MLI) in June 2017. As a first step, Germany would like to amend more than 30 of its 96 DTTs, provided that the other countries agree. In November 2020, the MLI was introduced as part of a national legislative pro - cedure; however, the implementation law only covers 14 DTTs. In compliance with the recommendation of BEPS Action 12 and the EU Directive on Administra - tive Cooperation in the field of taxation, the German government managed to implement an obligation to notify cross-border tax arrangements into national law within the set deadline of 31 December 2019 (see 7.1 Overarching Provisions ).
As of 1 January 2025, the MLI applied to seven Ger - man DTTs. As of 1 January 2026, the MLI is applied to another two DTTs. On 9 October 2025, the Federal Ministry of Finance published a draft bill for an “Act Amending the Act on the Multilateral Convention of November 24, 2016, Implementing Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting”. This amending law is intended to incorporate a further 62 German DTTs, which currently do not meet the BEPS minimum standard, into the implementation of the MLI in the first stage. It remains to be seen how this process will develop. 9.2 Government Policy and Objectives Approach The German government has fully supported the BEPS project at all times, and Germany played a prominent role in the project, both politically and professionally. As Germany already has comparably strict tax laws, the particular intention of the German government with regard to BEPS is to enforce stricter international taxation standards in the EU and other countries, in order to achieve fair tax competition between coun - tries. On 14 December 2022, the EU Commission presented a directive to ensure a minimum level of taxation of 15% of multinational enterprise groups within the EU (published on 22 December 2022). Such directive was implemented into German tax law in 2023 and the minimum taxation applies as of 2024 for multinational enterprises that have generated revenue of EUR750 million or more in at least two of the last four financial years. Furthermore, the EU Commission intends to work swiftly on regulations to implement the allocation of taxing rights under Pillar One of the OECD plans. The Unshell Directive On 22 December 2021, the EU Commission presented a proposal for a directive in the fight against shell enti - ties ( Briefkastenfirmen ) within the EU (the so-called Unshell Directive). This proposal (also referred to as ATAD III) intends to establish new transparency stand -
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