AUGUST 2000 EUROPEAN TAXATION allocation of the rights developed under an R&D CONCLUSION agreement As can be seen from the discussion above, the new princi- Although the content of the documentation reg deseed ples for cost-sharing agreements change the existing rules and illustrated in much more detail. Documentation in some significant areas, including membership. There- appendices thereof, as well as the documentation of the ng agreements. Companies that are presently engaged in benefit for the service recipient and evidence that the cost- sharing agreements in Germany should review any agreed services have actually been rendered by the existing arrangements carefully and make whatever modi provider. The actual computation of the allocated costs for 2000.1 If the necessary changes are not made, the conse- quences could be severe. If there are major shortcomings However, the new guidelines prescribe the necessary in the arrangement, the deductibility of charges stemming information in much more detail. The annual settlement of from a cost-sharing scheme could be denied in Germany list of the total expenses in respect of cost centres and their decreased by the tax authorities based on an estimation.To direct and indirect costs according to cost types such as that cannot participate in the same pool under the ne labour costs, travel expenses and office rent On the level rules, such agreements might need to be terminated. of the service recipient, the documentation may take a lumber of forms, including the form of monthly, quarterly, or annual reports on services or projects, relevant corres- pondence, research reports, lists of patent applications and 31. New Cost Sharing Guidelines, Para. 8