Germany’s Federal Ministry of Finance published a letter on 3 April 2025 addressing how Country-by-Country (CbC) reporting applies to tax-transparent partnerships, including their treatment under the Transitional CbCR Safe Harbour for Pillar Two.
The letter indicates that when disclosing information—such as profit before tax, equity, number of employees, etc.—for a tax-transparent partnership located in Germany or another country within a CbCR Report, Chapter 3, Section 2.1 of the OECD’s 2024 Guidance on Country-by-Country Reporting should be followed.
If the applicable accounting standards mandate full or proportional consolidation, the entity must be included in the CbCR as a group company to the corresponding extent—either fully or proportionally.
The guidance outlines four scenarios:
- Domestic partnership (asset management):
Treated as stateless for Pillar Two and excluded from the Safe Harbour. GloBE income is adjusted for non-group partners, and the group partner may apply the Safe Harbour if eligible. - Domestic partnership (commercial income, domestic PE, German partner):
Also treated as stateless and excluded from the Safe Harbour. The PE is not recognised as such under Pillar Two. Safe Harbour eligibility depends on correct attribution of profits and taxes. - Domestic partnership (commercial income, domestic PE, foreign partner):
Similarly excluded as stateless. The PE qualifies under Pillar Two rules. The Safe Harbour applies using standard PE provisions, with income and taxes reported as per the PE’s accounts. - Foreign partnership with foreign partner (no German PE):
Treated as stateless and excluded from the Safe Harbour. Income attributable to non-group partners is excluded, and the remainder allocated to the foreign group partner, who may claim the Safe Harbour if requirements are met.
