Loan agreements between a foreign partner and its German
partnership are in principle recognized for tax purposes.
However, interest deducted at the level of the partnership is added back
at the level of the respective partner to determine the income
of the partnership as such and the proft share of the individual
partner. Hence, loan agreements between a foreign partner and
a domestic partnership are only relevant for the proft allocation
between the partners.
For further details regarding the treat-
ment of cross-border payments from the German partnership to
its foreign partner