6. The possibility of extending the provisions of an APA to a period ranging from the first day of the calendar year during which the subject first applied for an APA until the APA came into force if, after reviewing the first application, an APA was refused on the grounds that no agreement was reached between the tax authorities of a foreign counterpart. Under German law, a pre-price agreement (APA) is a combination of a prior agreement between the federal states on the transfer price between internationally linked companies and an expanded obligation based on it. At the end of the APA, the participating countries determine the method of transfer pricing to be applied for a fixed period in the future between the related companies or certain parts of the companies concerned. This is an administrative procedure based on requirements. The appendix begins with the definition of the different types of APA and describes the objectives of the APA process. The ability to participate in an APA MAP is considered with respect to contractual issues and other factors such as the audit status of the subject. Issues relating to multilateral GPAs (i.e., where there is more than one bilateral agreement) are also addressed. The central point of the annex deals in detail with the whole MAP-APA procedure, starting with the meetings before the presentation, on the presentation of a proposal, its evaluation by the tax authorities, the discussion and conclusion of the mutual agreement, the implementation of this mutual agreement and, finally, the follow-up of the agreement and a possible extension. While the Schedule focuses on the direction of tax authorities, it takes the opportunity to discuss how the taxpayer can best contribute to this process. Upon receipt of the application, the BZSt verifies that all conditions (including the applicant`s agreement not to challenge the fees) for the execution of an APP procedure are met.
An APP procedure is only implemented if the application is admissible and justified. AAAs – in the aforementioned sense – find their legal basis in the Double Taxation Conventions (DBA), in the respective articles on mutual agreement procedures. Germany has concluded DBA with more than 90 countries in the world. Most of these DBAs follow the OECD`s draft international agreement. The provisions on mutual agreement procedures are set out in Article 25, paragraphs 1 to 3, of the OECD Model Convention.