KPMG Germany Webpage
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The German thin capitalisation rules introduced in 1994 as sec. 8a KStG (corporation tax act) have now been in effect for slightly more than four years (see article no. 4). This span of time is too brief for court resolution of the numerous controversies surrounding what some consider to be a poorly drafted piece of legislation. The disputed matters range from fundamental challenges based on EU and tax treaty law to mechanical intricacies such as the proper treatment of multiple shareholder loans at different interest rates. Given the wide array of opinions in the literature and the hard line taken by the tax authorities in their 1994 directive on many, though not all, doubtful issues, it may be assumed that there is a lot of litigation "in the pipeline."
