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In addition to the new legal regulation, the Federal Ministry of Finance (BMF) has published a fact sheet on the transaction matrix (Fact sheet on the transaction matrix Section 90 para. 3 sentence 2 no. AO) and thus provided clarity on some points of the new regulation. In this article, I will give you an overview of the transaction matrix. The obligation to keep transfer pricing documentation arises from Section 90 (3) of the German Fiscal Code (AO). According to this, companies with cross-border business relationships with related parties or permanent establishments are obliged to keep comprehensive documentation in order to demonstrate that the business relationship is at arm’s length. Since the new regulation, the documentation consists of three components: 1. transaction matrix (Section 90 para. 3 sentence 2 no. 1 AO) 2. factual documentation (description of the actual circumstances) 3. appropriateness documentation (justification of the transfer prices) The documentation must be complete, truthful and comprehensible. The aim is to enable the tax authorities to make a proper assessment of the pricing between affiliated companies. The transaction matrix is part of the transfer pricing documentation. It is a structured, tabular overview of international business transactions with affiliated companies. It provides the tax authorities with key information on the scope, pricing and contractual basis of cross-border transactions at a glance. The transaction matrix is used to identify key audit areas with the aim that the transfer pricing documentation can (subsequently) be prepared in a targeted manner. The following information is mandatory: Transactions are not subject to standard taxation, for example, if a preferential tax regime (e.g. license box) applies in connection with the corresponding transaction. The obligation to submit the transaction matrix is based on Section 90 (4) AO. The transaction matrix must be submitted within 30 days of notification of a tax audit without a separate request. This applies to: Important: This obligation also applies if the audit relates to previous years. An audit order in 2025 therefore also triggers a retroactive obligation for transactions from previous years – with a 30-day deadline. Example: If a tax audit for the years 2019-2022 is announced on March 10, 2025, the transaction matrix must be submitted by April 9, 2025 at the latest. Outside of external audits, the tax authorities can also request the documents at any time. This also applies to the transaction matrix. Anyone who fails to submit the transaction matrix by the deadline faces a statutory surcharge of EUR 5,000 in accordance with Section 162 (4) AO. The transfer pricing documentation already contains the information to be documented with the transaction matrix. With the new regulation, companies with cross-border business relationships are obliged to make this information available to the tax audit in a separate document. The transaction matrix allows the tax audit to decide which areas to focus on and whether transfer pricing documentation is requested at all. Relief for companies: The previous regulation has been eased by the fact that only a transaction matrix, master documentation and records of exceptional business transactions must be submitted within 30 days without being requested. Previously, the transfer pricing documentation (local file) also had to be submitted within the deadline and uninvited. The transfer pricing documentation must now be submitted upon separate request, but then also within 30 days. The problem: In practice, it is not realistic to keep the transaction matrix and prepare the transfer pricing documentation within 30 days. This means that there is a de facto obligation to submit both “documents”: the transaction matrix and the transfer pricing documentation. The transaction matrix is not an optional extra – it becomes a mandatory element of the transfer pricing documentation. My recommendation: All required documentation should be prepared before an upcoming tax audit, namely: the master documentation (if size classes are exceeded), the records of extraordinary business transactions, the transaction matrix and the transfer pricing documentation in the form of the local file. Prepare in good time – collect the relevant data now to avoid sanctions. Do you need support in preparing the transaction matrix and transfer pricing documentation? Please do not hesitate to contact me! Disclaimer: The article uses simple language for better understanding and is also abridged with regard to the individual conditions required by law. This article does not constitute legal or tax advice, but is intended solely as general information. Every situation is individual, so I always recommend professional advice to avoid tax disadvantages.
From January 1, 2025, German tax law introduced a new obligation for companies with cross-border business relationships: the transaction matrix. It is part of the revised transfer pricing documentation.
Who Must Comply with Germany’s Transfer Pricing Documentation Rules?
What is the transaction matrix – and why was it introduced in 2025?
Mandatory Information: What must be included in the transaction matrix?
Submission Deadline: When and how must the transaction matrix be filed?
Penalties: What happens if the transaction matrix is missing?
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