Wednesday, 26 July 2017

Germany enacts rules limiting the deductibility of related-party royalties

The German Bundestag and Bundesrat (Federal Parliament and Federal Council) on May 12, 2017, and June 2, 2017, respectively, agreed on implementing legislation that restricts the tax deductibility of related-party royalty payments under certain conditions. This royalty limitation rule is focused on situations in which the royalty income is taxed as part of a special patent box regime that does not meet the Organisation for Economic Cooperation and Development’s (OECD’s) 'nexus' approach.

Once the German President signs the law, the rule will apply to royalty expenses incurred after December 31, 2017.

Source & more info: PwC