German TP Documentation – Transaction Matrix

A couple of months ago, Germany amended its transfer pricing (“TP”) legislation.  Article 90 of the Foreign Tax Act now requires the preparation of a so-called “Transaktionsmatrix” – a transaction matrix.  This transaction matrix covers the cross-border transactions with related parties and needs to be submitted to the tax administration within 30 days either by explicit request or by receipt of the note declaring the opening of a tax audit (“Außenprüfung”).

Contents

The statutory law itself does not provide further clarification of the contents of the matrix.  For this, the Federal Ministry of Finance has issued a note dated 2 April 2025.  It defines the transaction matrix as a structured overview in the form of a table.  Besides other information, it especially lists the items to be included.  Specifically, this includes the following information on controlled cross-border transactions:

• Subject and type of controlled transaction.
• Parties to the controlled transaction, identifying provider and recipient.
• Volume of the transaction and monetary consideration.
• Contractual basis.
• Applied transfer pricing method.
• Affected tax jurisdictions.
• Clarification, whether the controlled transaction is subject to regular taxation or not.

Deadline

Purpose of this information is to inform the tax administration in selecting the focus of interest in a tax audit.  The note also clarifies that the obligation to provide the transaction matrix is effective from 1 January 2025.  It covers all financial years under audit, thus also years before 2025.  It has to be emphasized that the note for the opening of the tax audit does not need to contain an explicit request for the transaction matrix or the transfer pricing documentation of the taxpayer.  Rather, the taxpayer has to know that this obligation exists.  Only if the tax administration requests the transaction matrix without directly opening a tax audit, it has to be spelled out.

While there is a strict deadline, the requirements do not contain any thresholds for inclusion of transactions in the matrix.  While such exist for the detailed documentation in the Local File, all cross-border transactions with related parties should be listed here, even those with a low transaction volume.  Unclear remains how the volume for transactions besides loans shall be defined.  Here, the taxpayer may need to apply informed judgement to avoid that the entries into the matrix become not excessively convoluted.

Contact Us

As a final comment, we point out that the 30-day deadline is not limited to the transaction matrix.  Rather, the complete contemporaneous TP-documentation of the taxpayer must be submitted after the tax audit is announced.  In this, as well in other TP-matters, feel free to reach out to us under info@bdanalysis.ch if you would like to explore how we could assist you.