Pursuant to the “license barrier” rule in Sec. 4j German Income Tax Act, newly introduced as of 1 January 2018, arm’s length business expenses of a company incurred for the right to use intellectual property (“IP”) and certain other rights are not fully deductible from the income tax base, if (i) the corresponding licensing income of the licensor is taxed at a rate lower than 25% (“Preferential Taxation”), (ii) this low tax rate is not the standard tax rate applicable in the respective jurisdiction …
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