Funktionsverantwortlichen

Funktionsveranlagung is a German concept within the taxation system, referring to the apportioning of functional income of a permanent establishment (PE) between the country where the PE is located and the country where the ultimate parent company of the enterprise is situated. This concept is based on the OECD's Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations and is designed to prevent tax avoidance strategies through the manipulation of transactions between associated enterprises.

Funktionsveranlagung typically applies to companies that have operations in multiple countries, with a parent company in one country and a permanent establishment in another. The purpose is to ensure that the profits or income of the permanent establishment are taxed in the relevant country, while preventing double taxation and similar income subjected to tax in both countries.

In 2018, Germany enacted the "Mindeststeuergesetz" (Minimum Corporate Tax Act), which introduced the concept of Funktionsveranlagung, aimed at bridging the gap by taxing resident groups in a self-assessment procedure. This allows companies to operate under a group-wide minimum effective tax rate of at least 15% on its EBEIT (Eigenkapital- und Wertschriftensteuer) in the first place. Additionally, direct claims against the German tax authorities under this Act will be made possible and are being discussed internationally.

Ultimately, Funktionsveranlagung remains a method to strengthen the tax base and resist the erosion of taxable income in an increasingly complex tax environment.