Germany MOF Releases Draft Bill on Application of Arm’s Length Principle to Cross-Border Business Relocations

The German Ministry of Finance July 5 released a draft bill on the application of the arm’s length principle for business relocations in cross-border cases. The draft bill includes measures that would: 1) clarify the criteria for business transactions to be considered a uniform relocation of functions; 2) apply the capital value-oriented valuation method to calculate the agreement range and value of the transfer package; 3) apply arm’s length prices for components of the transfer package; 4) adjust the transfer prices for the transactions leading to a functional relocation; 5) explain capitalization interest rates and capitalization periods for risk-free investments; ...