No income adjustment when granting a loan to a domestic related party with a foreign permanent establishment

Brief commentary on decisions of 28 April 2004 by the Supreme Tax Court ruling that Sec. 1(1) of the Aussensteuergesetz does not apply in cases where a domestic (i.e. German) taxpayer grants a (non-interest bearing) loan to a domestic related party, and the loan serves to finance a foreign permanent establishment of that related party. In such case, no cross-border business relationship exists as defined by Secs. 1(1) and (4) of the AStG.