Consequences of APA. The complex nature of the German APA is believed to be the major reason for why so few APAs have been issued in Germany, it is also said to be the reason for why the German APA program’s applicability only have lead to a limited degree of knowledge around the process for both tax authorities and corporations (Xxxxxxx, 2007). According to Xxxxxxx and Xxxxx, (2001), the German tax authority prefers the usage of audits and does therefore not encourage requests for binding rulings. Due to this German APAs have been strictly restricted to exceptional cases and therefore it exist very little experience of APAs in Germany (Xxxxxxx and Xxxxx, 2001). As mentioned, the German tax authorities have been reluctant to participate in negotiations for an APA. However this attitude has somewhat changed and several state ministries of finance have issued regulations on APAs (Xxxxxx and Xxxxxxxx, 2000). The reasons for why APAs have become a more attractive international tax planning instrument for an increasing number of German corporations are a tightened regulatory environment, an increase in TP audits and the increased openness of the tax authorities (Schnorberger and Wingendorf, 2005).
