GERMANY Law and Practice Contributed by: Alexander Gottstein, MTR Legal Rechtsanwälte
As of today, Germany has not implemented Amount B as a standalone, directly binding domestic rule. In practice, German transfer pricing law (in particular, Section 1 AStG) and applicable administrative princi - ples remain the governing framework. Any later adop - tion of Amount‑B elements would more likely occur through updated administrative guidance and/or targeted legislative amendments rather than through automatic direct effect. 4.2 Pillar One – Amount A “Amount A” (reallocation of a share of the residual profits of very large multinational enterprises to market jurisdictions) requires a multilateral convention. That instrument has not, as far as can be seen, entered into force and has therefore not been implemented in Germany. Accordingly, there are currently no German implementing provisions that would apply Amount‑A mechanisms in a binding manner. Until an internation - al agreement is concluded, ratified and implemented, existing treaty allocation rules and transfer pricing rules remain applicable. 4.3 Pillar Two Germany has implemented Pillar Two through the Min - imum Tax Act ( Mindeststeuergesetz , MinStG), which transposes the EU Minimum Tax Directive (Directive (EU) 2022/2523) and the OECD Pillar Two Global Anti-Base Erosion (GloBE) framework into domestic law. It applies to large multinational groups and large purely domestic groups with consolidated revenue of at least EUR750 million per annum and aims to ensure an effective minimum tax rate of 15% per jurisdiction. The MinStG provides, in particular, for the Income Inclusion Rule (IIR), the Undertaxed Profits Rule (UTPR) and a domestic top‑up tax consistent with the Qualified Domestic Minimum Top-Up Tax (QDMTT) concept. As a general matter, the rules apply for fis - cal years beginning after 30 December 2023, while the UTPR typically applies later (generally for fiscal years beginning after 30 December 2024). The regime is accompanied by extensive reporting and filing obli - gations. For financial reporting purposes, the German Com - mercial Code ( Handelsgesetzbuch , HGB) clarifies that deferred taxes should not be recognised for differ -
ences arising solely from the application of the Min - StG – or comparable foreign minimum tax regimes – Section 274 (3) HGB; and for consolidated accounts, Section 306 HGB). 4.4 Specific Features or Deviations of Pillar Two Based on the current legislative design, the MinStG closely tracks the OECD GloBE framework and the EU Directive. Practical complexity arises less from “Ger - man deviations” and more from implementation details (eg, data availability, safe harbour options, transitional rules, and interactions with domestic taxes). Updates may occur through follow‑on legislation and adminis - trative guidance to incorporate OECD “Administrative Guidance” and to operationalise compliance. 4.5 Digital Services Tax Germany has not introduced a standalone national Digital Services Tax (DST). The taxation of digital sup - plies is primarily addressed via VAT rules aligned with EU law (including destination‑based taxation and one‑stop‑shop/OSS mechanisms for certain B2C supplies). In parallel, EU regulatory regimes (eg, the Digital Services Act) impose supervisory and compli - ance duties, but these are regulatory rather than tax measures. A digital levy is discussed periodically at policy level. Legally, however, relevance arises only once formal legislation is enacted; political debates or proposals are not equivalent to current law. 5. Anti-Avoidance and Anti-Evasion Measures 5.1 Definition and Identification of Tax Fraud, Evasion, Tax Avoidance and Abusive Schemes Germany’s general anti‑abuse rule is Section 42 AO (abuse of legal arrangements). In essence, tax rules cannot be circumvented through inappropriate legal structures; key considerations include the appropri - ateness of the structure in light of the economic facts and whether there are substantial non‑tax reasons.
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