The German corporate tax reform 2008 brought dramatic changes to the transfer pricing legislation. Especially the transfer of functions to an affiliated company abroad can lead to a hypothetical arm’s length test as well as to retroactive adjustments by the fiscal authorities. However, there are two exceptions to the tightened regulations – the „escape-clause“ and the „safe harbor“. The escape- clause is applied when the proportion of transferred intangibles does not exceed 25 % of the value of the transfer package (comprising the functions, tangibles, intangibles, risks, potential profit, etc.). Two requirements must be met for the benefits of the safe harbor to apply. First, the transferred function, which is now performed by the company in the country abroad, is only performed for the company in Germany. Second, the remuneration for the performed function is determined by using the cost-plus method. Brigitte W. Mühlmann and Gerald Posautz discuss the two exceptions in detail and also show examples of typical transfers of functions from Germany to Austria.