The German tax authorities have chosen a phased approach for the introduction of penalties. Although documentation will be required for transactions entered into after 31 December 2002, the penalty provisions will not become effective until six months after the decree-law is introduced and not before 1 January 2004 outlook Although the German legislature has finally introduced mandatory transfer pricing documentation and penalty provisions in german tax law, the precise documentation requirements the taxpayer must fulfil will not be finalized until the decree-law is issued. While companies with current transactions in Germany know the importance of written intercompany agreements the new section 90 puts particular emphasis on documenting the legal circumstances. The latter should include appropriate intercompany agreements Taxpayers will be well advised to implement a proper documentation system including a storage process in the near future. from a practical point of view it is advisable not to postpone the documentation process because of the 60-day requirement for presenting documentation and the harsh penalties related to it. Taxpayers should also keep in mind that preparing documentation retroactively is even more burdensome and costly than preparing it contemporaneously For more information on this alert, please contact Heinz-Klaus Kroppen kroppen @deloitte. de Stephan Rasch rasch@deloitte. de or your local Deloitte Touche transfer pricing specialist c 2003 Deloitte Touche LLP. Deloitte Touche refers to deloitte Touche llp and related entities. Al rights reserved. For full legal disclaimer, click hereThe German tax authorities have chosen a phased approach for the introduction of penalties. Although documentation will be required for transactions entered into after 31 December 2002, the penalty provisions will not become effective until six months after the decree-law is introduced, and not before 1 January 2004. Outlook Although the German legislature has finally introduced mandatory transfer pricing documentation and penalty provisions in German tax law, the precise documentation requirements the taxpayer must fulfil will not be finalized until the decree-law is issued. While companies with current transactions in Germany know the importance of written intercompany agreements, the new section 90 puts particular emphasis on documenting the legal circumstances. The latter should include appropriate intercompany agreements. Taxpayers will be well advised to implement a proper documentation system, including a storage process, in the near future. From a practical point of view, it is advisable not to postpone the documentation process because of the 60-day requirement for presenting documentation, and the harsh penalties related to it. Taxpayers should also keep in mind that preparing documentation retroactively is even more burdensome and costly than preparing it contemporaneously. click here. For more information on this alert, please contact Heinz-Klaus Kroppen hkroppen@deloitte.de Stephan Rasch srasch@deloitte.de or your local Deloitte & Touche transfer pricing specialist. © 2003 Deloitte & Touche LLP. Deloitte & Touche refers to Deloitte & Touche LLP and related entities. All rights reserved. For full legal disclaimer,