The German Federal Ministry of Finance has published guidance on the restriction of the deduction of royalty payments subject to preferential regimes for the 2018 tax year. The restriction limits the deduction of royalty payments to related parties made after 31 December 2017 if the income is taxed at a low rate of less than 25% as a result of the benefits of a preferential regime not in compliance with the modified nexus approach developed as part of BEPS Action 5.
The guidance confirms t…