Yes, as long as reasonable in the circumstances
Yes. The cost-plus method is one of the three transfer pricing methods accepted by the German tax authorities. (The other two are the comparable uncontrolled price method and the resale price method.) Since the transfer pricing regulations put taxpayers together with their foreign related parties under a requirement to select the method most appropriate in all the circumstances, cost-plus will generally be acceptable as a method of determining German taxable income, unless it is manifestly unreasonable in the given case.
Mark-ups typically lie within the range of 5% - 10%. The business, or "economic", pre-condition is that the German activity should contribute towards the earning of income, rather than earn that income directly. Marketing or sales support provided by a small German entity might very well be able to charge out its activities under the cost-plus method, whereas a German sales subsidiary acting as an independently operating distributor almost certainly could not.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
