Tag: Convertible loan

Netherlands vs [X] B.V., legal successor to [Y] U.A., March 2020, Pending before the Supreme Court, Case No ECLI:NL:PHR:2020:102

Netherlands vs [X] B.V., legal successor to [Y] U.A., March 2020, Pending before the Supreme Court, Case No ECLI:NL:PHR:2020:102

/ bank syndicate, Convertible loan, Equity or Debt/Loan, Financial Transactions, Financing structure, Fraus legis, Freedom of establishment, General Anti-Avoidance Rules (GAAR), Hybrid loan, Interest deduction, Netherlands, No commercial purpose or rationale, participation loan, Sham transactions, Tax Avoidance Schemes
To acquire companies and resell them with capital gains a French Investment Fund distributed the capital of its investors (€ 5.4 billion in equity) between a French Fund Commun de Placement à Risques (FCPRs) and British Ltds managed by the French Investment Fund. For the purpose of acquiring the [X] group (the target), the French Investment Fund set up three legal entities in the Netherlands, [Y] UA, [B] BV, and [C] BV (the acquisition holding company). These three joint taxed entities are shown as Fiscal unit [A] below. The capital to be used for the acquisition of [X] group was divided into four FCPRs that held 30%, 30%, 30% and 10% in [Y] respectively. To get the full amount needed for the acquisition, [Y] members provided from their equity to [Y]: (i) member capital (€ 74.69 million by the FCPRs, € 1.96 million by the Fund Management, € 1.38 million by [D]) and (ii) investment in convertible instruments (hybrid loan ... Continue to full case