BFH Relaxes Deduction Ban on Loans from Affiliated Companies: Interest Claims and Individuals Excluded

The prohibition on deductions under Section 8b(3) of the German Corporate Income Tax Act (KStG) is one of the most practically relevant areas of dispute in corporate income tax law. In its ruling of April 1, 2026 (I R 11/24), the Federal Fiscal Court (BFH) has now ruled in favor of taxpayers in two particularly contentious scenarios, thereby providing significant legal certainty for the structuring of loan relationships. This article by Raphael Baumgartner and Laurenz Wagner analyzes the key features and consequences of this decision based on three central aspects: the exclusion of interest receivables from the deduction prohibition, the limited personal scope of application for natural persons acting as controlling shareholders, and the still-unresolved issue of the assessment of hidden profit distributions.