The local tax court of Muenster (case reference 9 K 1213/09 G,F) recently ruled on the obligation to discount non-interest-bearing liabilities with a maturity of 12 months or more from the balance sheet date. The taxpayer took the position that the underlying liability did not have a maturity of more than a year because, under German civil law, a loan with an indefinite term may be terminated by the lender or debtor giving three months’ notice. Further, the taxpayer provided the court with a copy of a loan agreement that included a provision on interest payments. The taxpayer admitted that, despite the loan agreement, no interest payments had been made or accrued and there was no information as to whether interest income was recorded at the level of the lender.
The local tax court rejected the taxpayer’s arguments because they did not take into account the actual facts from an economic perspective. According to the court, the actual term of the loan exceeded 12 months and the loan was in fact non-interest-bearing, so it had to be discounted for tax purposes.
By examining the facts from an economic perspective, the local tax court was in line with a 2009 decision of the Federal Tax Court (BFH) (see GTLN 1/2010). The decision is now final.
If you have any questions, please contact the authors of this article at gtln@deloitte.de or your regular Deloitte contact.
