In the tax return for FY 2014, BF AG declared a asset loans to related parties (holding company C) in the amount of USD 67,322,417.76 and liability loans to related parties (shareholder) in the amount of USD 110,051,410.39. Furthermore, interest income of USD 1,917,825.02 and interest expenses of USD 1,894,410.39 were declared in the tax return. BF AG reported a net loss of USD 16,803.00.
An assessment was issued 10 September 2015 by the tax administration. The tax administration adjusted the taxable net income/loss by an additional income of USD 1,024,661.00 and further tax adjustments of USD 1,224.00. The adjustment of USD 1,024,661.00 was justified because interest of 3.5% (USD 1,024,661.00) had been paid on the outstanding interest claims amounting to USD 29,276,021.00, although it had been agreed in the loan agreement of 28 December 2002 that the interest was to be paid quarterly. The granting of insufficiently interest-bearing advances to related companies constituted a pecuniary benefit in accordance with the “2014 information sheet on interest rates for the calculation of pecuniary benefits”.
An appeal was filed by BF AG with the Administrative Court
Judgement of the Administrative Court
The Court dismissed the Appeal.VGH2017008