Tax Management Transfer Pricing REPORT Volume 8 Number 21 Wednesday, February 23, 2000 issn1521-7760 Text Documents GERMANY Revised German Cost Sharing Arrangemen Regulations [Issued 12/30/99; Translation by Deloitte Touche GmbH in Dusseldorf] This translation is not official or binding, but for information purposes only. Federal Ministry of Finance B4-S1341-14/99 Berlin, 30 December 1999 Supreme Tax Authorities of the States For information: Federal Tax Academy Federal Tax Department Principles for the examination of income allocation by cost sharing arrangements between internationally related enterprises Referring to the outcome of the discussions with representatives of the supreme tax authorities of the states, the following applies to the examination of income allocation by cost sharing arrangements between internationally related enterprises: 1. In General This letter is intended to provide guidelines for the application of the arm's length principle if internationally related enterprises structure their relationship in the form of a cost sharing arrangement. The individual reimbursement of services is not affected regardless of whether the transfer price is determined according to the direct or the indirect metho 1.1.Definition Cost sharing arrangements are agreements that are concluded by internationally related enterprises to perform or receive services for the parties'mutual interest during a particular period of time by cooperating with each other in a p The services must be pe est of the receiving enterprises and in the expectation of a benefit, for instance in creased income. The services may relate to auxiliary functions of the pool Such cost sharing arrar f a cost pool. The costs may affect all types of services, for example assets, administrative or other services. In this context the where applicable only the deductible amount thereof-are to a key based on the respective ben efits of the pool members ternal partnership without establishing a partnership or a permanent e Page 1Tax Management Transfer Pricing Report-Revised German Cost Sharing Arrangement Regulations