Most tax treaties apply the exemption method in respect of business income attributable to foreign PE´s. According to a supreme tax court ruling as of Sept. 25, 2001, losses suffered in a foreign PE are in principle tax deductible nevertheless. Furthermore, due to private rulings issued by the Ministry of Finance in case of a tax neutral reorganization of a foreign corporation into a partnership or PE falling under the scope of the Austrian Reorganization Tax Act a loss carry forward of a foreign corporation is transferred to the domestic parent. Johann Mühlehner makes an analysis of the requirements to be fulfilled in order to achieve such a transfer from a German subsidiary to the Austrian parent company.