A Bulgarian subsidiary entered into an interest-free convertible loan with its Luxembourg parent. Tax authorities applied an arm's length interest rate and imposed withholding tax on the notional interest. Relying on CJEU case C-257/20, the Bulgarian Supreme Administrative Court confirmed the withholding tax liability in 2023, though it applied a separate transfer pricing benchmark establishing a market rate partially favourable to the taxpayer ... Read more

A Dutch group deducted interest on convertible loans from French FCPR affiliates, exploiting a tax mismatch where interest was deductible in the Netherlands but untaxed in France. The Dutch tax authority denied the deductions, arguing the financing structure was designed to circumvent anti-abuse rules. The Netherlands Supreme Court agreed in July 2021, ruling the arrangement constituted fraus legis and upholding the denial of interest deductions ... Read more

A Romanian company granted interest-free loans to its affiliate, Poiana Ciucas S.A. Tax authorities assessed notional interest income using comparable market rates of 5.45% to 19.39%. The taxpayer argued the funds represented a capital contribution and that claims were time-barred for periods before May 2010. The Supreme Administrative Court remanded the case for re-examination in December 2020 ... Read more

A French investment fund acquired a Dutch target group using a layered structure combining equity, convertible hybrid loans at 13%, and third-party bank syndicate financing. The Dutch tax authority challenged the interest deductions claimed within the fiscal unity, invoking fraus legis. The Advocate General issued a preliminary opinion before the Netherlands Supreme Court in January 2020, analysing the arm's length nature of the financing and potential abuse of law ... Read more