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What you need to know before expanding your Dutch business to Germany
Doing business in Germany from the Dutch point-of-view
Anyone who first enters the European market will quickly discover that every European country is different. The Netherlands and Germany are major international players and share a long trading history. Every year, Dutch entrepreneurs enter the German market but often with a Dutch frame of reference. Is this way of doing business effective, and how can a Dutch company prepare for the German market? Grenzhoppers, Internationales Netzwerkbüro, STRICK and Klaar Voor DE Start examine how to appeal to German customers and create awareness of Dutch companies in Germany.
Economic connections and differences
The Netherlands and Germany have strong economic connections with each other. Therefore, it is no surprise that Germany is the most important sales market for Dutch companies. Compared to other trading partners, such as Japan, neighboring Germany is very close. Nevertheless, successfully entering the German market requires intensive preparations for the Dutch neighbor. Germany is a large country, with significant differences in language, culture and regulations. While it is self-evident for most Dutch companies to be active internationally, it is more self-evident for German enterprises only to be nationally active. This activity is often challenging for Dutch companies: How can a Dutch company excel in the German market? On the other hand, this also has advantages: the physical distance is small, and the German business culture is more apparent than the international business culture.
German companies often sufficiently benefit from the German national market. Despite this, Germany remains a top location in Europe. According to the UK comparison portal, Nimble Fins, the country ranks highly in the business climate, trust in the rule of law and economic health. In addition, foreign companies have many options for applying for subsidies. Nevertheless, foreigners should be prepared for the individual characteristics of the German member states. Each Member State has its own culture, dialect, customs and economic specialization.
The first step: Find and understand the differences
Being aware of corporate and intercultural differences greatly benefits Dutch companies entering the German market. Consider, for example, the separation of work and private life. German business people like to see their life as a role play, based on hierarchy. At work, they show expertise. They let go of the professional role at home, and the personality comes to the fore. In the meantime, it is much more natural for Dutch business people to show personality at work as well. Conviviality takes you far in Dutch business life. With this knowledge, you can already imagine how a business meeting can go when a Dutchman and a German start a conversation without prior knowledge of each other’s culture.
In general, the Dutch want to appear sympathetic and demand a comfortable working environment. Germans like to appear competent and demand respect in the workplace. While the Dutch want to have fun with and at work, Germans often find it a challenge to deal with the self-relativization and self-irony of the Dutch. Germans often want to hear concretely how the problem is being tackled, while Dutch are quickly satisfied with a “We’ll get this sorted out, so don’t worry.” As a result, the Dutch often approach German customers with ‘promises’ such as “We deliver this product the fastest.” If this promise is made, German customers will want to see clear proof of why your company is the best, based on facts, not feelings. Dutch consumers respond better to storytelling, so keep this in mind to be very precise in your communication with German consumers. As a result, Germany experts advise against copying Dutch business plans to the German market, as this generally causes miscommunication.
Leistung schafft Vertrauen … Performance inspires trust!
Expanding to Germany or starting a business in Germany requires intensive preparations, but it is certainly possible to achieve success. Be prepared to be patient and assume that the achievements will be long-term. One way to make your company, products and/or services more attractive to the German market is to set up a gmbH. With this ‘camouflage method,’ you can effectively build a German identity and attract customers and partners.
In addition, your company must comply with German laws and regulations. As mentioned before, these are different than in the Netherlands. As a Dutch company in Germany, your business will be negatively affected if you do not comply with the rules. You will not only run into problems with the German authorities; German consumers and companies will also not trust your company and will not want to do business with you until the distant future. So make sure that the general terms and conditions (Allgemeine Geschäftsbedingungen) are correctly formulated, tailored and legally valid.
Once the first steps have been taken in Germany, the communication to the German market must be formal, detailed and correct. Germany experts recommend avoiding language errors, avoiding conflicts, addressing others by their last name and using precise language. Be tactful, honest, trustworthy and kind. Also make sure that there are German-speaking employees active in your company, as Germans prefer to do business in their language. Understanding the German language and culture prevents projects from missing out due to language problems and intercultural differences.
Communication is key
Approaching customers and partners takes time and effort, but the road to a good deal can be long and tiring if you don’t adhere to the business values and standards. An effective way to build trust and shorten the path to decision-making is to keep meeting reports (Kaufmännische Bestätigungen). The Dutch like to arrange business over the phone, but Germans find it more pleasant to do business by keeping written notices. Has a price been agreed, but one party says €15, and the other says €11? Then it is a matter of looking back at the review reports since the price is written in black and white. With these written summaries, you carefully check the agreements, and immediate (written) action can be taken if people disagree with the content.
In the end, Germans prefer to choose what they already have and prefer to be on the safe side. Ultimately, the boss makes the final decisions, and only these will be accepted and executed. Changes take time and require patience; a Dutchman who prepares properly and accepts this will eventually reap the benefits.
Global Connect Admin is a Dutch company with German influences and customers. We mainly focus on companies that are active internationally. While our managing director is German, he chose the Netherlands as his head office, because of its international nature and attractive corporate culture. While we speak the international language, we also understand national company languages, including Germany. As a Dutch company, if you have questions about the German market or would like assistance with international business as a German company, do not hesitate to contact us. We are happy to help you and your company on the way.
Intercultural differences between West and East
A closer look into the Russian negotiation style
No secret that the west and Russia clash with different views and styles of communication. When taking a closer look at the intercultural dimensions of Hofstede, for example, you can already see vast cultural differences. What does this mean for your business communication? What should you be aware of when negotiating with the West and the East?
Keld Jensen and Michael Gates spoke about the Russian negotiation style and how to prepare for intercultural communication. Keld Jensen is an expert in negotiation, trust and behavioral economics. While he is a managing director of a listed Scandinavian company, he has more than 30 years of experience in international management, negotiation and communication. Michael Gates, managing director of CrossCulture, is an international expert on cross-cultural management. They wanted to share the Russian negotiation style with their expertise and background and gave insightful examples of why Europe and Russia often misunderstand each other.
Before we continue, we would like to share a disclaimer. The main goal is to educate, not to generalize, the Russian business culture. It is like the saying that all Dutch are direct: while this is generally true, very indirect Dutch also exists. Furthermore, we wish to give insights on the intercultural differences between Russia and the West, not to justify the actions of Putin.
Russians tend to trust 'the individual' rather than 'the system'
Gates stated that trust is an issue in general. Furthermore, there seems to be a gap in trust in every culture, especially when you take a closer look into ‘official’ and ‘personal’ trust. It is a long-time dilemma: If your friend commits a crime, will you lie in court to save them? In some countries, such as Russia and Korea, the answer is often “yes.” Yet, in other countries, such as Sweden and Finland, the answer is often “no.” These answers have to do with whether the people trust the system or the individual.
"I win, you lose"
When taking a closer look into negotiation, Russians tend to find winning the most important outcome. Gates stated that the Russian culture includes obsessions with strength and power. However, when you compare this obsession of strength to, for example, the United States, the Russian Federation tends to be more passive and patient, like Asian cultures. So if Russians tend to wait for the other party to speak first but want to ‘win,’ how do you prepare for negotiations?
Try to find a third way of negotiating instead of seeing negotiations as positional with a win-lose or lose-lose situation. Instead of acting from your frame of reference, try to understand the other party. What are the characteristics? How can the flow of communication go smoothly?
Important factors to know before you start negotiating with Russian enterprises
Geographically, Russia is divided into European Russia and Asian Russia since this country shares its land borders with sixteen countries. Therefore, it is no surprise that the Russian business and negotiation culture is European and Asian. While Russia is relationship-based like Europe, there are vast differences. For example, Russia is more passive and has much patience for doing business. As a European company, if you wish to make it big in Russia, you can only do so by having an extensive Russian network with solid relationships. When European companies negotiate, there is already a level of trust, namely the expectation that the other party also wishes the best for you. In Russia, this is no such thing; Business people tend to be more cautious and want to know what is in it for them.
The start of the negotiation: Be prepared to start strong
When your company starts negotiating with a Russian counterpart, they will most likely ask you first to tell what you think. Afterward, you will most likely hear a form of resistance due to the high level of cautiousness and suspicion. So you might wonder: How do I deal with this? How do I have a healthy negotiation with a partner who does not entirely seem to trust me? Well, Gates stated that you must be strict with Russians.
Russian governments and companies prefer hard power over European ‘soft power.’ To fight pressure, you need to respond with force. Negotiating expects to recommend starting your Russian business journey small but steady. Be well prepared, and expect matters to start slowly. Just as starting doing business in Germany, it takes time for the market participants to trust you fully. If you are working with trial and error, make sure not to do business with life-changing parties that negatively affect your business.
During the negotiation: Mirror and hold your ground
Negotiating and doing business in Russia is a long-term process with much pushing and pulling. It also often happens that Russians have different perceptions of truth. Just as in Korean culture, it is allowed to tell white lies. The views on white lies are often the biggest barricade between European and Russian business; being aware of this will benefit you during negotiations.
Russians tend to be cautious listeners interested in European enterprises, yet also suspicious. Russian culture is full of emotion. However, they do not show emotion and prefer apathy over empathy. You can see this in the way Russians smile. In the Netherlands, it is not uncommon to see people do small talk and smile while doing business. In Russian business life, smiling is seen as a form of intelligence. So actually, if you are communicating with Russian business people, and they never smile at you: See this as a compliment, not an attack. And if you smile, make sure to let your Russian counterparts know it is a form of politeness and trust from the west. Are you unsure how to act? Play it safe and secure by mirroring your negotiation partners.
Finishing the negotiation: Be patient and respectful
As seen in the infographic at the beginning of this article, Russia has a high level of power distance. In general, Russians have different views on trust based on system and personal levels. However, one thing is clear: If you want negotiating to go well, you must have a person in charge that is powerful and a true leader. Russia’s business style is very autocratic.
If you want to finish the negotiation on a positive matter, be sure to build and maintain a close relationship with the CEO and the people the CEO fully trusts. You will find that the process will go much quicker, and the level of trust gaining to go much faster.
Jensen shared a clear overview of steps to take during negotiations, namely:
-Replace if necessary. Does the personal chemistry not work as intended? Do not be afraid to replace negotiators on both sides.
– Silence is key. If you are unsure how to react to certain provocations, respond by silence.
-Do not be afraid to delay the negotiations. Think long-term.
-Be clear in your communication. Choose precise formulations and provide an alternative when necessary.
-Empathy works in the west, apathy in the east — play along with your negotiator. Do not be afraid to think from a different mindset than you usually do.
-Ask questions to make the other party feel heard and show that you respect them.
-If you have no other option, fighting is more effective than giving in.
In the end, Russian organizations that are internationally active will be less challenging to negotiate with than Russian-only enterprises. Currently, doing business with Russia is not recommended due to international sanctions and actions. We hope to show that it is easy to misunderstand other cultures. If you have any questions regarding your international business, please do not hesitate to reach out to us. We will gladly assist you.
Image by slon_dot_pics
Cross-Border positions, also referred to as external positions, are most likely for any organization that goes global. Suppose your organization has its main office in, for example, the United States, with branches in Europe and/or Asia. In that case, you will have asset and liability positions of reporting banking offices outside the US. Cross-border financing helps with international trade by providing a source of funding, enabling businesses to compete globally and beyond their domestic borders. This sometimes requires the lender or provider to act as an agent between companies, suppliers, and end-customers. Examples are cross-border loans, letters of credit, repatriable income, or bankers acceptances (BA).
With the global pandemic forcing organizations to change strategies or even their core business, many have expanded globally or relocated to another country. We have taken a closer look at the changes in cross-border positions worldwide by viewing outstanding claims and liabilities of Q3 2020 in trillions of US dollars.
Between Q3 2019 and Q3 2020, cross-border claims on developed countries increased by 1.75 trillion USD, with the liabilities increasing by 1.46 trillion USD.
Claims in developed countries, otherwise called advanced economies, have declined. Intragroup positions partly drove the movements from one year earlier. The decline is centered on related offices, especially on those in the US, due to the unwinding of central bank dollar swap lines.
Non-bank financial institutions (NBFIs) were involved with the decline; claims on the UK, the Netherlands, Luxembourg, France and Italy declined, with most of them vis-à-vis NBFIs. Another partly offset influence was the increase in Japan and Germany’s claims, notably their NBFIs and resident banks.
During the pandemic, creditor banks in developed countries and offshore centers have reported a large contraction in their cross-border claims on emerging markets and developing economies (EMDE). During Q2 and Q3 of 2020, global cross-border shares on emerging markets and developing economies declined by 95 billion USD. Major developed countries and offshore creditors – such as UK, US, Hong Kong, Singapore and Japan banks – reduced their lending to developing countries by 97 billion USD in these six months.
The Q3 2020 claims have increased by 0.07 trillion USD in the offshore centers, with the Q2 2020 liabilities increasing by 0.15 trillion USD.
Compared to claims on developed countries, claims on offshore centers expanded by 41 billion USD. Especially Hong Kong SAR and the Cayman Islands have been doing well. More than half of Hong Kong’s increase was intragroup claims, with Singapore and Bermuda having the least growth.
Emerging market and developing economies
The Q3 2020 claims increased 0.03 trillion USD compared to Q3 2019. The Q3 2020 liabilities, compared to Q3 2019, have increased as well, with 0.13 trillion USD.
Cross-border claims on emerging markets and developing economies continued to fall, driven again by claims on Latin America and the Caribbean, with the year-on-year growth remaining negative. Just as one year earlier, these movements were partly driven by intragroup positions. Claims on non-financial corporations in major economic regions of Brazil, Mexico, Chile, Colombia and Argentina declined the most.
As mentioned earlier, creditors reported a large contraction in cross-border claims in developing countries. However, simultaneously, creditor banks within these countries reported a modest expansion. In contrast to the reduced lending of 95 billion USD, banks in EMDE booked a 26 billion USD increase in cross-border claims during Q2 and Q3 2020. The banks that led this expansion in emerging Asia-Pacific were mainly China and Chinese Taipei.
Before you expand or start abroad, it is helpful to know what parts of the world are convenient for your business. Having cross-border positions in countries such as the US, the Netherlands, France, Germany, and Japan can be rewarding; however, even though they work well together, each country and/or state has individual rules. Meanwhile, China and Russia have many business opportunities, but you must have high insider knowledge to use and find all the business possibilities. The UK has always played a big part in the global economy; however, much has changed due to Brexit. In case you want a professional to help you with this, feel free to send us a message. As the saying goes: a good beginning is half the work.
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Seeing the forest for the trees during the COVID-19 pandemic is a significant challenge. What rights do you have in the Netherlands as a (non-)Dutch business owner? Access to specific support packages depend on your living and working situation. If you live in France, for example, but pay taxes in the Netherlands, you can use schemes of the Dutch Tax Authorities, such as “special deferment of payment” and “reduction of the provisional assessment.” What kind of help is out there for foreign employees in the Netherlands? What can you do if your Dutch company is located in France? Which financial aid packages apply to you? We have listed relevant financial aids for you.
The WW (Unemployment Insurance Act)
In case you have employees whom you have employed for an indefinite period, you must record their employment contracts in writing to apply for the low unemployment insurance premium. You must indicate that you have done this in the tax return, even if it is still incomplete. For employees who started working before 31 December 2019, you had the option to arrange this until 1 July 2020. Many companies and institutions, such as hospitals, are now dealing with the WW’s premium differentiation. The Dutch cabinet had therefore decided to give employers more time, mainly due to the coronavirus impact.
An immediate record of the employment contract in writing is necessary for employees who entered your company after 31 December 2019. This contract does not necessarily have to be on paper; you can save the employment contract digitally if you have signed and scanned the written agreement or if you set up a digital contract with a qualified electronic signature from you and your employee. Further options are to send the employment contract by e-mail, to which the employee replies that they agree. Another option is to save the employment contract in your HR-system.
Due to the coronavirus, many sectors, such as healthcare, have to deal with much extra overtime. As a temporary scheme, no employer, regardless of the industry, has to pay the high unemployment insurance premium retroactively in 2021. Usually, this was required if employees with a permanent employment contract of <35 hours worked overtime for 30%.
Widening of the free space
Under the work-related expenses scheme, you have the option of spending part of your taxable wages on untaxed allowances, benefits in kind, and provisions for your employees. The free space on your taxable salary, up to and including 400,000 euros, is 3% in 2021. The year before, this was only 1.3%. For amounts of the wage bill above 400,000 euros, the free space remains 1.18% in 2021.
This space offers you an opportunity extension to provide extra support for your employees during the pandemic with the financial scope. You can kill two birds with one stone by purchasing a gift voucher or gift package for your employees. By doing that, you help both your employees and the sectors affected by the crisis.
Reduction of the average wage
If you are dealing with a decrease in turnover due to the corona crisis, you may set the customary wage lower for your payroll tax returns for 2021 and 2020. To do this, you do not need permission from the Dutch tax authorities. However, it would be best if you meet the following conditions: pay attention to the current account debt or dividend, the wages of the holder of substantial interest, and turnover influencing due to special matters (e.g., a strike, merger, or division). You determine the customary wage of 2021 by dividing the “2021 turnover excluding VAT” by the “2019 turnover excluding VAT.” Multiply this amount by the customary of 2019. You can read the 2020 and 2021 calculation overview on the Dutch tax authority website.
Each country has its corona measures, which affect employees who live or work across the border. There are various options for frontier workers; the Netherlands works efficiently with Belgium and Germany. The following applies to the withholding and remittance of payroll tax:
- No changes take place for the home frontier worker
- You can continue to deduct Dutch payroll taxes from your salary
However, what does this situation look like if you are an employer who employed French workers? What if they are forced to stay at home while retaining their salary? To ensure that entrepreneurs who live or work across the border are not left out, the Dutch government has used the Tozo loans. Entrepreneurs can apply for this benefit, for example, from 1 March 2021, with retroactive effect from the previous month (1 February 2021). From 1 October 2020 to 1 April 2021, the third Tozo support package, Tozo 3, is active. Tozo 4 is operational from 1 April 2021 to 1 July 2021. Examples of the Tozo scheme are:
- Do you live in France, but do you have your company in the Netherlands? You can receive a Tozo loan for your working capital of up to 10,157 euros. You can submit your Tozo loan application to the municipality of Maastricht. However, for your livelihood, you have to rely on social assistance in France.
- Do you live in the Netherlands, but do you have a company in France? If you meet the conditions, you can receive a Tozo benefit for your living expenses. However, this cannot be done in your working capital; you must arrange this in France.
If, as a Dutch company, you employ a French employee during the pandemic, you can make use of the relaxation of administrative obligations for payroll taxes. You may not determine the French employee’s identity at this time through a physical ID. Usually, the employee falls under the anonymous rate of 52%. However, you do not have to do this until the 30th or June 2021. You must still apply the employee’s identity correctly as soon as possible. Due to the prescribed working from home and maintaining a distance of 1.5 meters, it can be challenging to comply with all administrative obligations for payroll taxes. In this case, the tax authorities will not impose any consequences.
NOW (Temporary Emergency Bridging Measure to maintain Employment)
The NOW organization scheme replaces the WTV (Shortening of Working Time). The NOW is a substantial contribution towards wage costs, for which you receive an advance from the UWV (Institute for Employee Insurance). This allowance goes from 80% to 85% of the wage bill. The wage bill exemption remains 10%. If your company has a Dutch business address, you can use NOW. If your company has a French business address, but you and your employees are covered by the Dutch social insurance, you can apply for NOW as well. The application period for NOW 3.2, under modified conditions, is from 15 February 2021 to 14 March 2021. NOW 3.3. will most likely take place from 17 May 2021 to 13 June 2021.
TVL (Allowance Fixed Expenses)
SMEs and self-employers have the option of obtaining a partial allowance for fixed expenses. If you have a structural turnover loss of >30% and meet the conditions, you can request an allowance of up to 90,000 euros from the TVL through the RVO (Netherlands Enterprise Agency). This TVL scheme applies from 1 October 2020 to 30 June 2021.
Fixed travel allowance
If your employees receive a fixed travel allowance, you do not need to adjust this allowance, even if they work entirely or mainly at home due to the pandemic. Until 1 April 2021, the existing fixed travel allowances can still be reimbursed tax-free by the employer, even if these are no longer (fully) implemented. You must meet this condition as an employer: the fixed travel allowances were granted by you before 13 March 2020. If you want to read more information, the Dutch tax authorities have made an FAQ overview about payroll taxes and travel expenses during the corona crisis.
From 1 June 2020, the Dutch government implemented the rule that everyone on public transport must wear a mask. Until 1 April 2021, you may reimburse or provide masks’ costs tax-free to your employees as a targeted exemption.
WHOA (Homologation Private Agreement in Bankruptcy Act)
If you are at risk of bankruptcy due to high debts while still running a viable business, you can agree on a debt settlement with the WHOA without all creditors’ consent. Companies without good survival chances also benefit from this agreement because they can quit without bankruptcy. Besides, you keep control of your company during the WHOA-process. With the WHOA-Roadmap, you can follow the step-by-step path from preparation to an agreement:
- You consult with creditors.
- You make agreements.
- These agreements are recorded in a draft agreement.
- You submit the draft agreement to your creditors and shareholders.
- You organize a vote for creditors and shareholders.
- One week after the vote, you draw up a report on the outcome.
- You submit the composition to the court.
- The court 9homologation) confirms the compulsory) agreement on the proposed debt settlement.
The content and structure of the agreement must, however, comply with the regulations. For example, you must divide your creditors into classes or a hierarchy. The WHOA gives you the freedom to set this up yourself. If you fail to approach one or more creditors, these creditors retain their right to full payment of your outstanding debts. A majority within a class must agree to the proposal. The aim of the agreement must be that your company will be financially healthy again after restructuring. If your company has no survival chances, a better result should be achieved through this agreement compared to bankruptcy. Besides, the agreement must be feasible and well-thought-out, under the legal regulations on the agreement’s decision-making and content. Finally, the agreement must be reasonable; the plan is not intended to put creditors and shareholders in a disadvantageous position and suddenly change your staff’s terms of employment.
Do you have offices, units, or shares in France or the EU? Then you can benefit from a general agreement procedure, thanks to the recognition of the EU member states. The registration and publication of these approval procedures are in the public Insolvency Register. From 1 April 2021, these will most likely be entered in the Trade Register as well.
Whether or not corona still exists, the Dutch government and tax authorities request you to prepare everything in a timely matter. If you request a deferment of payment, you do not have to pay immediately. Send your declaration in good time, even during the crisis, because the UWV needs data to use specific support schemes as useful as possible. If you are entitled to emergency funds, you can rely on these by having your papers in order. As you can see in this article, if you meet the conditions, you have many options for obtaining Dutch government support. The Netherlands mainly cooperates effectively with Germany and Belgium, but there is support available for French workers and companies as well. We especially recommend keeping an eye out on the current information, data, programs, forms, and disruptions via the Dutch government websites. In addition, we are always ready to talk to you and support you.
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Tax security is a high priority for tax authorities. The most critical influences on investment and location decisions are uncertainties in corporate tax and the VAT system. It is crucial to ensure financial security, which is also the case with digital business models in Germany.
To have Tax Certainty, you need Compliance and Controversy. You have obligations to cooperate with the tax audit, and you need to record your work before and during this audit. Are there tax disputes? Then you can use dispute settlement instruments.
The recently applied administrative principles of the tax auditing practice in Germany are:
- Increased duty of cooperation, according to Section 90 (2) AO. The relevance of documents and data of foreign persons, such as e-mails, Messenger messages, and electronic media, is necessary. If necessary, you can contractually guarantee the internal group relationship.
- Increased obligation to cooperate in accordance with Section 90 (3) AO. You must provide evidence for data or documents as a basis for testing by using different methods.
- Suitability documentation. With the introduction of the “Best Method”-rule, you can leverage third-party comparison data for budget calculations and sensitivity analysis for valuation.
- Estimates, according to Section 162 (3) and (4) AO. Please refer to this Section if your documentation cannot be used, even if the content differs from the tax authorities’ view.
ATAD implementation law (Anti-Tax Avoidance Directive)
Little change has taken place in ATAD. If you wish to read about this law, the European Commission is consistent in releasing ATAD information.
Tax CMS: Accounting obligations and tax audits in Germany
“For tax evasion of the various forms of intent, conditional intent is already sufficient.” Legal Framework – Decision Implementing Section 143 AO.
If the taxpayer has set up an internal control system (ICS) to meet tax obligations, this may be an indication against intent or recklessness. However, this does not exclude an investigation of the concerned individual case.
Verbandssanktionengesets/Association Sanctions Act (VerSanG):
The basis of the association sanction is a so-called association law. This includes tax evasion. Association acts can be punished with hefty fines; the amount of the fine depends on the company’s size. If there are sufficient factual indications, public prosecutors are obliged to conduct an investigation (principle of legality). It is explicitly stated that (fiscal) CMS measures can have a mitigating effect as part of the sanction.
Transfer Pricing Life Cycle
Even errors down to the smallest details can cause issues. You can use the Transfer Pricing Life Cycle to determine where attention is necessary.
- Identification: Provide continuous identification of transfer pricing issues.
- Tax Assessment: Provide a tax analysis of the identified transfer pricing issues based on provided calculations.
- Contract and Action Instructions: Ensure documented formalization of transfer pricing models in written agreements and instructions.
- Methodology and Actual Implementation: Ensure uniform application of transfer pricing methods for comparable transactions.
- Data Delivery and Calculation: Provide a consistent calculation of transfer prices according to the defined methodology.
- Booking: Provide the accounting mapping of transfer prices in an understandable and uniform form. Monitoring: Provide regular monitoring of compliance with transfer pricing models throughout the year.
- Archiving: Provide audit-proof storage of the data in an understandable form.
- Process Monitoring and Escalation: Provide monitoring of processes and escalations.
- TP Documentation: Secure the documentation content for so-called local files.
- Tax audit: Ensure implementation of tax audit findings in subsequent years.
If you need further information, or if you have any questions, feel free to contact us. You can find the necessary information on this topic on the OECD (Organisation for Economic Cooperation and Development), the BMF (Federal Ministry of Finance of Germany), the European Commission, and KPMG Germany websites.
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