Guidelines Address Migrating Business

International Tax Review, Vol. 32

Posted: 17 May 2009

See all articles by Alexander Voegele

Alexander Voegele

affiliation not provided to SSRN

Stefan Lutz

Lutz-Econ; HMKW University

Abstract

As the largest economy within the EU, Germany hosts a number of multinational enterprises that conduct an increasing number of cross-border migrations of business functions. New German guidelines (Verwaltungsgrundsätze Funktionsverlagerung) concentrate on the object of a migration - the transfer package - and its profit potential. When determining arm’s-length, it is not decisive whether the transfer package was profitable. The value is usually calculated based on the net present value of expected future earnings that the transfer package could generate in its market and in the hands of the new owner. Up-front investments and other expenses incidental to performing the business need to be considered in the valuation. The price of the transfer package can be paid as a one-time payment but remuneration for the shift usually must be paid based on an annual licence fee. So the new guidelines also affect deemed current licence fees of cases that have already been audited by the tax authorities.

Keywords: business, tax, transfer prices, trade, MNE

JEL Classification: K, L, M

Suggested Citation

Voegele, Alexander and Lutz, Stefan and Lutz, Stefan, Guidelines Address Migrating Business. International Tax Review, Vol. 32, Available at SSRN: https://ssrn.com/abstract=1405269

Alexander Voegele

affiliation not provided to SSRN ( email )

Stefan Lutz (Contact Author)

Lutz-Econ ( email )

Ringstrasse 6
Gernsheim, Hessen 64579
Germany
+4915146672069 (Phone)

HOME PAGE: http://lutz-econ.de

HMKW University ( email )

Department of Economics
Solmsstrasse 6
Frankfurt, Hessen 60486
Germany
+4915146672069 (Phone)

HOME PAGE: http://https://www.hmkw.de/

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