ARTICLE · 12 MAY 2004

Shareholder Debt: Draft Finance Ministry Decree on Thin Capitalisation

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The finance ministry has drafted a new decree to resolve some of the doubts on the application of the thin capital rules following a change in the law for 2004.

GermanyTax

Article by Hans Martin Eckstein

The finance ministry has drafted a new decree to resolve some of the doubts on the application of the thin capital rules following a change in the law for 2004

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The revised statute significantly extending the coverage of the German thin capitalization rules contains many unclear provisions. In a noteworthy effort to provide timely guidance, the Federal Ministry of Finance has drafted a decree dealing with some of the more urgent issues in interpreting the new rules. The new decree is intended to be read in concert with its predecessor of December 15, 1994 which continues to apply to the extent that it does not conflict with the new provisions. Changes to the draft have been requested by the provincial ministries of finance and there are comments on the draft to be expected from the various trade associations before the text can be finalised. However, we would like to take this opportunity to summarise the position the federal ministry of finance would

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