In a recently published decision of 11 March 2008, the German Federal Financial Court (Bundesfinanzhof) held that losses from permanent establishments in the US (i.e. non-EU/EEA) are not deductible for tax purposes in Germany. Details of the decision are summarized below.
(a) Facts. In the tax year 1999, the plaintiff, a German limited liability company, participated in two partnerships established in the United States. On computing its taxable profits, the pl…