When founding and running the start-up, various financial and tax law issues arise that often require specialist counselling (tax registration, balance sheet, etc.). In addition, there are the intra-group calculations of services between parent company and subsidiary, which raises complex cross-border tax (and economic) issues and requires contractual agreements between parent company and subsidiary. Here, the legal provisions in Germany have only recently been reformed.
It should also be noted that such contractual arrangements also affect, for example, the French tax administration, since the tax result of the French parent company is of course also affected by the determination of the transfer prices. In order for these arrangements to be acceptable to the German tax authorities, the remuneration for intra-group services must be determined in advance according to written contracts. They must also comply with the arm’s length principle. The arm’s length principle must be proven to the German tax authorities. Since cross-border services are involved, the requirements for proof are higher than on a purely national level. In addition, formal documentation of the transfer prices is also required. This is already necessary with a turnover of EUR 600,000.00 in the current business year.