German ministry of finance (MOF) administrative guidelines on cost contribution arrangements as of 31.12.2018 canceled
By letter dated 5 July 2018, the German Federal Ministry of Finance (MOF) repealed the BMF administrative guidelines "Principles for the examination of deferred income through cost contribution arrangements between internationally affiliated companies" with effect from December 31, 1999. This letter will be replaced by Chapter VIII of the OECD Transfer Pricing Guidelines 2017, which is available for download on the OECD website.
Capital VIII of the 2017 Transfer Pricing Guidelines 2017 is applicable to cost contribution arrangements (CCAs) between several undertakings operating on a cross-border basis in the common interest, who share risks and make contributions, e.g. in connection with
Within the scope of such a development or service pool, the respective contributions at arm's length prices are to be valued and reimbursed by the companies on the basis of the expected benefits.
Chapter VIII of the OECD Transfer Pricing Directive 2017 on cost contribution arrangements contains guidance on:
For the year 2019, a transitional period, i.e. cost contribution arrangements can still be concluded on the basis of the administrative guidelines BMF letter of 1999.
If the previous view of the German tax authorities in the framework of the BMF letter of 1999 is more favorable than chapter VIII of the OECD Transfer Pricing Guidelines, a CCA should be considered already in 2018 or 2019 in the case of a planned introduction of a CCA.