Starting January 1, 2025, a new component to its transfer pricing documentation requirements have been added in Germany. The transfer pricing regulations in Germany are evolving with the formal implementation of a transaction matrix. This tool will be expected by tax auditors as part of the documentation submitted by companies. This initiative is part of a broader effort to enhance transparency and structure in data reporting. Companies that are not adequately prepared may face challenges in compliance.
The Basics: What Is the Transaction Matrix and When is Action required?
The transaction matrix is a new requirement under Section 90 (3) of the German Fiscal Code (AO). It is a structured, high-level summary of your cross-border transactions with related parties, allowing tax authorities to quickly understand the nature of your intercompany transactions.
Here’s what it needs to include:
- What the type of transaction is (e.g., goods, services, loans)
- Who are involved to the transaction (both parties, including who’s providing and receiving)
- What are the transactional amounts (in euros)
- Which contract it is based on
- What transfer pricing method you’re using (e.g., cost-plus, CUP)
- Which countries are involved
- If there’s any preferential tax treatment (like patent boxes)
You can group similar transactions together, and you don’t need to attach intercompany contracts -a reference suffices. There’s even room for flexibility if you’ve already agreed on a different format with the tax authorities in a past audit.
Timing
- If you receive an external audit order in 2025 or later, and it involves cross-border transactions, you’ll need to submit the transaction matrix within 30 days.
- If the audit is for something like VAT or payroll taxes and doesn’t touch international dealings, you’ll only need to submit it if asked.
- Authorities can also ask for it outside of audits, like during a preliminary ruling request.
- There’s a flat EUR 5,000 penalty if the matrix isn’t submitted on time.
📌 Important: Even if the audit covers years before 2025, the new rules still apply if the audit order is issued in 2025 or later.
Germany’s new transaction matrix is another sign that tax authorities are moving toward more structured, standardized data – something we’re seeing in many countries.
Quantera Global specialises in assisting businesses with navigating the complexities of transfer pricing requirements. Whether it involves new obligations in Germany, updates to OECD guidance, or local documentation demands in other regions, we possess extensive experience in managing all aspects. With our global network covering over 50 jurisdictions, we provide local expertise and a consistent global approach. If you need guidance or help, we are here to assist.
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