Stückmann Podcast Episode 33: German companies’ business in the US – tariffs and transfer pricing in a tense situation
How are current US tariffs affecting German companies? What role do transfer pricing arrangements play within international corporate structures? And what options are available for structuring sales, production and supply chains in the US?
In this episode of “Taxes to go”, Juliette Gill and Florian Weeg discuss the current economic climate in the US, the growing legal uncertainty in customs law, and practical approaches to optimising customs and transfer pricing structures.
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The impact of current US tariffs on German companies
Current US tariffs and exchange rate fluctuations are increasing competitive pressure on German companies in the US market. At the same time, the uncertain legal situation regarding US customs law means that companies need to reassess their structures and supply chains.
The tension between customs duties and transfer pricing
Whilst customs law is based on the price of the goods, transfer pricing is used to allocate profits within the group in accordance with arm’s length principles. This can give rise to conflicting objectives if measures taken to reduce the customs duty burden have tax implications for the allocation of profits.
Options available without a physical presence in the US
Even companies without their own operations in the US can reduce their customs costs, for example through bonded warehouses, tariff optimisation or by applying the so-called first-sale rule.
Optimisation at US sales subsidiaries
If a company has a US sales subsidiary, this opens up additional options. In particular, in the case of direct-selling structures, shifting sales margins to the US can result in a lower customs duty burden.
Opportunities for innovation at US production companies
The greatest scope for manoeuvre is available when manufacturing in-house in the US. Through local sourcing, tailored supply chains and the strategic structuring of goods and services relationships, customs and transfer pricing structures can be comprehensively optimised.
Be cautious about across-the-board price adjustments
A blanket reduction in intercompany product prices can be problematic from both a customs and a tax perspective. Any adjustment should therefore be carefully analysed and coordinated with both areas of law in mind.
