Germany implements legislation that restricts the tax deductibility of related-party royalty payments

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The Federal Parliament and the Federal Council on 12 May 2017 and 2 June 2017 have agreed on the implementation of legislation which restricts the tax deductibility of the contributory payments under certain conditions. This royalty limitation rule is focused on situations where the royalty income is taxed as part of a special patent box regime that is not the “Nexus” approach to the Organization for Economic Cooperation and Development (OECD).

As soon as the German President signs the law, the rule applies to the license fees acquired after 31 December 2017.

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