Yes. The principle is based on disallowance of "excess" interest, rather than on re-qualification of liabilities as "deemed" capital. The safe haven debt/equity ratio is 1.5:1 (3:1 for holding companies). The rules apply to corporation tax only, i.e. not to trade tax. On December 12, 2002, the ECJ held the German provision to be in conflict with European law and thus inapplicable to companies with EU shareholders. Draft legislation proposed in the meantime would cure the discrimination by applying the rules to companies in domestic, as well as foreign, ownership.
The German rules apply to interest-bearing finance provided by shareholders or their related-parties to German subsidiaries. Broadly, the allowed debt/equity ratios are 1.5:1 for operating subsidiaries and 3:1 for German intermediary holding companies without their own business operations. These ratios are "safe-havens", that is, it is at least in theory possible to justify shareholder loan finance in excess of these ratios
