Germany (d) Transfer and Use of Intangibles (e) Cost Sharing Agreements 24.6 Documentation (a) Prior Approaches (b) Standard Questionnaire (c) Audit Respons 24.7 Unilateral Rulings and Advance Pricing agreements (a) Basic Issues (b) Advance Pricing Agreement Administration 24.1 INTRODUCTION Transfer pricing is now becoming one of the main tax issues, if not the predom- inant tax issue of multinational enterprises operating in Germany. This develop ment is being driven by the german tax authorities who are focusing on transfer prices in almost every tax audit of a multinational enterprise. The tax auditors of- ten believe that profits are shifted artificially abroad due to the high tax rates in Ger- many, but the development of transfer pricing in Germany must also be seen in ar international context (a) U.S. Impact The increasing attention German tax auditors have given to transfer pricing started after the release of the final U.S. Regulations in 1994. After the release of the U.S. Regulations, many European countries adopted a similar regulatory framework and increased pressure on multinational companies by introducing doc umentation requirements, penalties and by shifting the burden of proof to the tax payer. In Europe, Germany is one of the last major Organization for Economic Co- operation and Development(OECD)members that has not changed its transfer pricing regime in the last two or three years Thus, from a regulatory point of view, Germany fell behind countries like the United Kingdom, France, Belgium, and Denmark. The German Ministry of Finance has finally started its review of the 1983 administrative principles" in earnest after some standstill due to the withdrawal of experienced staff in the wake of German reunification. Meanwhile, the Ministry has issued a new version of the regulations covering cost sharing agreements. It is widely believed that a complete overhaul of the regulations by the German Ministry of Finance will follow in due course Some parts of this article are extracted from Kroppen/Eigelshoven, in I BFD, Tax. Treatment of Transfer Pric- ing, Germany 'Decree of the Federal Ministry of Finance dated February 23, 1983, BStB1 I 1983, p: 218, see Kroppen/Eigelshoven, in: IBFD: Tax Treatment of Transfer Pricing, Germany, pp 102 ff. for an English translation. SCf. Transfer Pricing Report, March 13, 1996, p. 732 Decree of the Federal Ministry of Finance, December 30, 1999 Cf. Transfer Pricing Report, November 27, 1997, p 465