Tax Sharing Agreement Template for Germany

Tax Sharing Agreements are essential instruments for corporate groups operating in Germany who wish to efficiently manage their tax obligations across multiple entities. These agreements are particularly relevant when companies operate under the German tax consolidation regime (Organschaft), which allows for the fiscal integration of subsidiaries with their parent company. The Tax Sharing Agreement specifically addresses how tax liabilities, benefits, and responsibilities are distributed among group members, ensuring compliance with German tax regulations while providing a clear framework for internal tax allocations. The document becomes crucial when companies need to establish formal arrangements for sharing tax burdens and benefits, managing group tax payments, and coordinating tax compliance activities across the corporate structure. It typically includes detailed provisions for calculating individual contributions, payment mechanisms, and procedures for handling tax audits and disputes.

1. Parties: Identification of all participating entities in the tax sharing arrangement, including the controlling entity and participating subsidiaries

2. Background: Context of the agreement, including the group structure and purpose of the tax sharing arrangement

3. Definitions: Detailed definitions of key terms, including 'Tax Liability', 'Tax Benefit', 'Group Tax Return', 'Tax Period', and other relevant terms

4. Term and Termination: Duration of the agreement and circumstances under which it can be terminated

5. Tax Sharing Principles: Core principles governing the allocation of tax liabilities and benefits among group members

6. Calculation Methodology: Detailed methods for calculating individual tax contributions and allocations

7. Payment Terms: Timing and mechanics of payments between group members, including interim and final payments

8. Tax Returns and Documentation: Responsibilities and procedures for preparing and filing tax returns and maintaining necessary documentation

9. Information Rights and Obligations: Requirements for information sharing and cooperation between group members

10. Dispute Resolution: Procedures for resolving disagreements regarding tax calculations or payments

11. Governing Law and Jurisdiction: Specification of German law as governing law and jurisdiction for disputes