Does your group have a German subsidiary or a German branch that pays royalties to a related party abroad under an intra-group license agreement? If so, a recent development in the German tax landscape could significantly affect you: The German Royalty Barrier Rule (RBR, Section 4j of the German Income Tax Act, (ITA)) is increasingly becoming relevant in German tax audits. Importantly, the German Tax Authorities (GTA) recently began expanding their scrutiny beyond traditional Patent/IP Box regimes.

By judgment dated 23 March 2023 (2 K 172/19), the Tax Court (Finanzgericht) Hamburg determined to what extent a tax office may request the submission of emails within the scope of a tax audit.
The Tax Court ruled that the request for submission of an overall journal in the form of a list of all emails, including emails that are not relevant for tax purposes (and that are not internal correspondence), was unlawful. According to the view of the Tax Court, the tax offices is not limited to conducting interviews since emails have an increased evidentiary evidence.

On 12 July 2022, the German Ministry of Finance has published a preliminary draft ministerial bill that, inter alia, provides for a reform of the tax audit and bookkeeping rules in the German General Tax Code and the German Act on crossborder administrative cooperation within the EU for tax audits. The draft has been resolved by the Federal Cabinett on 24 August 2022 and on 29 August 2022 the official Government’s Draft Bill has been published.