The Profit Split Method across Jurisdictions – Report on Germany

This article examines the legal framework and practical application of the profit split method (PSM) in Germany in light of recent legislative developments, administrative guidance, audit practice and advance pricing agreement experience. It analyses key German court decisions, including the Düsseldorf Fiscal Court’s pipeline cases and the Federal Tax Court’s 2024 ruling, to delineate the circumstances under which profit-based allocation methods are accepted or constrained.This article is part of a special issue of the International Transfer Pricing Journal on the application of the PSM across jurisdictions. The other articles include the General Report and contributions on Belgium, France, Ireland, Italy, Korea, the Netherlands, Portugal, Spain and the United States.