No requirement for a related-party loan to be secured
Unusual circumstances apart, there is no requirement for a related-party loan
to be secured.
Rather, any need for security is deemed to be fulfilled by the
German transfer pricing concept of “support within a group”, which means that
a German company can neither bear any costs of securing or guaranteeing a
related-party debt, nor can it incur with tax effect any form of bad debt write-off
on any finance given to related parties.
The few exceptions to these general
rules all relate to unusual circumstances, such as when a company becomes a
related party during the term of a loan.
EU Forecast
euf:ba18e:176/nws-01