Use the Lexology Navigator tool to compare the answers in this article with those from other jurisdictions. 

Advance pricing agreements

Availability and eligibility

Are advance pricing agreements with the tax authorities in your jurisdiction possible? If so, what form do they typically take (eg, unilateral, bilateral or multilateral) and what enterprises and transactions can they cover?

Yes, advance pricing agreements (APA) with tax authorities are typically bilateral but can sometimes be multilateral.

Generally speaking, APAs are available to taxpayers protected by a respective double tax treaty and in particular with respect to transfer pricing issues (eg, royalty fees, tolling fees and the remuneration of a commission). The applicant must have a legitimate interest in the APA.

Rules and procedures

What rules and procedures apply to advance pricing agreements?

The requirements and procedure regarding the application for an APA are outlined in detail in an explanatory note published by the Federal Ministry of Finance in 2006. The APA process usually starts with a preliminary meeting (ie, a pre-filing meeting) between the Federal Central Tax Office which is responsible for the negotiations with the other contracting country, the federal and state auditors as well as the taxpayer. In the course of the pre-filing the following aspects are discussed:

  • whether the case is suitable for an APA;
  • what the scope of the APA might be; and
  • what information and documentation must be provided in the course of the application.

The explanatory note contains a detailed list of information and documents to be included in the application. Four copies of the application must be submitted in written form to the Federal Central Tax Office.

An APA with the German tax authorities usually becomes legally effective only if the taxpayer agrees with the APA and waives his or her rights to appeal against tax assessments to the extent that such tax assessments comply with the agreement set out in the APA. After the APA has become effective and on application by the taxpayer, the local tax office must grant a binding ruling reflecting the agreement reached in the APA.


How long does it typically take to conclude an advance pricing agreement?

The timeframe for the conclusion of an APA cannot be predicted and depends on the complexity of the case. It usually takes between two to four years to conclude an APA, in some cases an APA can become effective after the period which was covered by the application.

What is the typical duration of an advance pricing agreement?

The tax authorities suggest a duration of at least three years and maximum of five years. Under certain conditions, a roll-back into preceding fiscal years is possible.


What fees apply to requests for advance pricing agreements?

Generally, the following fees apply:

  • €20,000 for an APA application;
  • €15,000 for an extension; and
  • €10,000 for the amendment of an APA.

Fees are reduced for smaller enterprises to:

  • €10,000 for an APA application;
  • €7,500 Euro for an extension; and
  • €5,000 for the amendment of an APA

and may in exceptional situations be reduced to zero.

Special considerations

Are there any special considerations or issues specific to your jurisdiction that parties should bear in mind when seeking to conclude an advance pricing agreement (including any particular advantages and disadvantages)?

It should be kept in mind that comprehensive information and documentation must be provided in the course of the APA process and that this process takes a significant amount of time and may tie up internal and external resources.

Click here to view the full article.