Important judgment on tax classification of financial instrument
On May 17, 2024 the Dutch Supreme Court rendered an important judgment on the tax qualification of a financial instrument that was issued by a company established in France in 2007. It concerned the ‘obligation remboursable en actions’ (hereinafter: ORA). The question was whether the instrument had to be regarded as equity (capital) or debt capital (loan) for the purposes of the Corporate Income Tax Act 1969. Although the dispute focused on the question whether the costs related to the issue of the instrument were allocable to a Dutch permanent establishment of the French company, the Supreme Court judgment potentially has a much broader scope.
The Netherlands is thus the first EU Member State to have submitted a bill to transpose EU Directive 2022/253 of December 14, 2022 into national legislation.
The draft bill contains accompanying measures to avoid the (immediate) levying of corporate income tax, personal income tax and real estate transfer tax.
The Supreme Court has clearly explained in this judgment how the doctrine of the diversion of funds relates to an entity that fulfills a pivotal financial function within the group.
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An easy-to-use reference work that will help businesses, institutions and organizations in their accounting practices. The tax rates, premiums and contributions for 2023 have been summarized for your ...
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