The situation
A plan to move functions and assets to a foreign subsidiary
A German maker of garden tools in Düsseldorf will move its European purchasing and distribution to its Dutch subsidiary in Venlo in January. Contracts with 140 Asian suppliers, the purchasing team and the Benelux trademarks will move. The CFO asks group tax for a memo on the German tax cost and what the Dutch company can use as starting values.
The rules come from three places: the exit-tax rules of the Anti-Tax Avoidance Directive, the German rules on transferring assets and functions abroad, and the Dutch rules on accepting those values. The hours go on separating what is a sale, what is an exit and what is a function relocation, and on valuing nothing twice.
What the research has to settle
The rules behind the answer
- An exit is taxed as if sold
- Under the Anti-Tax Avoidance Directive, transferring assets or tax residence out of a member state triggers tax on the difference between market value and tax value. Assets that stay in a German permanent establishment have not left.
- Instalments within the EU
- For transfers to another EU or EEA state, the taxpayer can pay the exit tax in instalments over five years. Interest and security may be required, and the deferral ends early on events such as a sale of the assets.
- Germany values the function
- When a function moves from a German company to a related foreign company, German transfer-pricing rules can require it to be valued as a package, including its profit potential. That valuation often matters more than the trademarks.
- The Dutch side should match
- The Directive requires the receiving member state to accept the exit value set by the departing state as the starting tax value, where it reflects market value. The memo should check that the Dutch values line up with the German ones.
How it runs in azta
From the question to the document
The question, as you would type it
German GmbH transfers its European purchasing and distribution function, supplier contracts and Benelux trademarks to its Dutch subsidiary. How is the transfer taxed in Germany, can the tax be paid in instalments, and does the Netherlands accept the German values as starting values?
You start with
A plan to move functions and assets to a foreign subsidiary
- 01
Describe the move
Give the functions, staff, contracts and assets moving, and how the Dutch company will pay for them. azta researches the Directive and the German and Dutch rules.
Cited research· Free - 02
Upload the plan and asset list
Add the project plan and the asset register. azta reads them and refers back to the items it relied on.
File upload· Pro - 03
Draft the memo
Ask for a memo covering what is transferred, how each item is taxed in Germany, the payment options and the Dutch starting values. Edit it in Canvas.
Canvas · Ask azta· Pro You send
An exit tax memo covering both the departing and the receiving country
What you get
An exit tax memo covering both the departing and the receiving country
Tax memo · draft
Moving purchasing and distribution to Venlo: German exit tax and Dutch values
What moves. The purchasing function, the supplier contracts and the Benelux trademarks move to the Dutch company. Under German transfer-pricing rules the move is likely to be treated as a function relocation, valued as a package including expected profit.
German tax. The Dutch company will pay for the package at arm’s length, so the transfer is a sale between related companies rather than an exit without payment. If any asset moves without payment, exit taxation applies to it, with the option to pay in instalments over five years.
Dutch starting values. The Dutch company should record the trademarks and the acquired goodwill at the price paid. We recommend agreeing the valuation method across both sides before the transfer.
Outcomes on your numbers
What azta is worth on this task
Pro pays for itself after
12 minutes a month
At €140 an hour, that is all the time Pro (€27 a month) has to take off your desk to cover its price.
Example figures. Replace them with your own.
- Hours back a year
- 40
- Capacity at your rate
- €5,544
- More exit tax memos a quarter
- 0.8
- Return on Pro
- 17.1×
- Research
- Drafting
- Your review
A scenario you set, not a promise. The hours that come back go to another client, or deeper into this one.
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Book a demoSources azta searches here
- EUR-Lex · Curia
- Gesetze im Internet
- wetten.overheid.nl
- Belastingdienst
What stays with you
- The valuation and the transfer-pricing documentation.
- The business case for the move.
- The position you take with both tax authorities.
Frequently asked questions
- Does azta value the function?
- No. It researches the rules for the valuation and what the documentation must show. The valuation is yours or your transfer-pricing advisor’s.
- Does it cover the move of staff as well?
- Yes. Ask separately about employment, social security and where the moving staff are taxed, and azta researches each.
- Can I compare the German rules before and after a change?
- Yes. Ask about the law at a past date, and open the provision in the reader to compare versions.
