Tag: Advance Ruling  

A letter ruling, which is a written statement, issued to a taxpayer by tax authorities, that interprets and applies the tax law to a specific set of facts

Luxembourg vs "TR Swap SARL", November 2022, Administrative Tribunal, Case No 43535

Luxembourg vs “TR Swap SARL”, November 2022, Administrative Tribunal, Case No 43535

The owner of a buy sell distributor in the pharmaceutical sector had entered into a total return swap with the company and on that basis the company had deducted a commission corresponding to 85% of net profits from its taxable income. The tax authorities disallowed the deduction claiming the swap-arrangement was not at arm’s length. The commission-payments received by the owner was instead considered a non-deductible hidden distribution of profits (dividend) and a withholding tax of 15% was applied. An appeal was filed with the Administrative Tribunal. Judgement of the Administrative Tribunal The Tribunal found the appeal of “TR Swap SARL” unfounded and decided in favor of the tax authorities. Excerpt “However, the court is obliged to note that the commissions paid to Mr … on the basis of the … and corresponding to 85% of the net profits of the company … amount to … euros, … euros, … euros and … euros during the disputed tax years 2014 ... Read more
Austria vs C-Group, March 2022, Bundesfinanzgericht, Case No RV/7102553/2021

Austria vs C-Group, March 2022, Bundesfinanzgericht, Case No RV/7102553/2021

C is the parent company of the C-group which is involved in the construction business. C is part of a joint venture and for the expansion of these activities a framework agreement on shareholder loans was concluded. Under the agreement two shareholder loans were granted: ***loan*** II totalling 212,935,716.33 euros and ***loan*** III totalling 446,000,000 euros. At issue is whether (***loan*** II and ***loan*** III) are to be regarded as hidden equity capital or debt capital. In regards of loan II a binding ruling had previously been issued stating that the loan was hidden equity. C took the position that both loan II and loan III were to be treated for tax purposes as equity capital. Following an audit the tax authorities assessed both shareholder loans as debt capital and added interest income to the taxable income of C. In regards of the binding ruling previously issued, the authorities stated that the underlying facts had changed to such an extend ... Read more

Luxembourg vs “Lux PPL SARL”, July 2021, Administrative Tribunal, Case No 43264

Lux PPL SARL received a profit participating loan (PPL) from a related company in Jersey to finance its participation in an Irish company. The participation in the Irish company was set up in the form of debt (85%) and equity (15%). The profit participating loan (PPL) carried a fixed interest of 25bps and a variable interest corresponding to 99% of the profits derived from the participation in the Irish company, net of any expenses, losses and a profit margin. After entering the arrangement, Lux PPL SARL filed a request for an binding ruling with the Luxembourg tax administration to verify that the interest charged under the PPL would not qualify as a hidden profit distribution subject to the 15% dividend withholding tax. The tax administration issued the requested binding ruling on the condition that the ruling would be terminate if the total amount of the interest charge on the PPL exceeded an arm’s length charge. Later, Lux PPL SARL received a dividend ... Read more
Advocate General’s Opinion in Belgian Excess Profit Exemption Scheme case before the EU Court of Justice

Advocate General’s Opinion in Belgian Excess Profit Exemption Scheme case before the EU Court of Justice

In the Advocate General Opinion delivered 3 December 2020, in the EU Commissions “Aid scheme” case against Belgium and Magnetrol International, it is proposed that the Court of Justice set aside the 2019 judgment of the General Court, on the ground that the Commission has, contrary to the findings of the General Court, sufficiently demonstrated in its decision that the Belgian practice of making downward adjustments to profits of undertakings forming part of multinational groups meets the conditions for the existence of an ‘aid scheme’. “In conclusion, the General Court incorrectly assumed that the conditions of Article 1(d) of Regulation 2015/1589 were not met in the present case. On the contrary, in the contested decision the Commission sufficiently demonstrated that the Belgian practice of making downward adjustments of the profits of undertakings forming part of a multinational group constitutes an aid scheme within the meaning of Article 1(d) of Regulation 2015/1589. The appeal is therefore well founded.” BELGIUM EXCESS PROFIT ... Read more