Tax Treaty Case Law around the Globe 2013
1. Aufl. 2013
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1. S. 131 Introduction
Thin capitalization rules (thin cap rules) have been included in many tax systems. They all have in common that they restrict the deductibility of group interest paid at the level of the debtor. However, the technical structure of thin cap rules differs to a large extent. Some structures are designed to attack individual intra-group loans, whereas others take the total financial structure of the debtor into account. This paper does not deal with the principle question of whether it is appropriate to have thin cap rules in a tax system. In this paper, the author will discuss a recent Netherlands Supreme Court (in Dutch: Hoge Raad; hereafter also HR) ruling: HR , no. 10/05268. In this ruling, questions were raised as to whether the Dutch thin cap rules were inconsistent with the DTC NL-Ger 1959, DTC NL- Fra 1973, and DTC NL-Port 1999 and whether they were inconsistent with EU law. Since this paper was submitted at the conference, Tax Treaty Case Law around the Globe 2013, it focuses on tax treaty law. Nevertheless, the author will also briefly discuss EU law.
2. Facts of the Case
X BV was a Dutch resident taxpayer for corporate income tax purposes. The...