Tag: Loan guarantee

British American Tobacco hit by £902 million tax assessments in the Netherlands

British American Tobacco hit by £902 million tax assessments in the Netherlands

According to the 2018 financial statement, British American Tobacco group has been hit by a £902 million tax assessments in the Netherlands. “The Dutch tax authority has issued a number of assessments on various issues across the years 2003-2016 in relation to various intra-group transactions. The assessments amount to an  aggregate net liability across these periods of £902 million covering tax, interest and penalties. The Group has appealed against the assessments in full. The Group believes that its companies have meritorious defences in law and fact in each of the above matters and intends to pursue each dispute through the judicial system as necessary. The Group does not consider it appropriate to make provision for these amounts nor for any potential further amounts which may be assessed in relation to these matters in subsequent years. While the amounts that may be payable or receivable in relation to tax disputes could be material to the results or cash flows of the Group in the period in ... Continue to full case
US vs SIH Partners LLLP, May 2019, US Third Circuit of Appeal, Case No 18-1862

US vs SIH Partners LLLP, May 2019, US Third Circuit of Appeal, Case No 18-1862

The Third Circuit of Appeal upheld the tax courts prior decision i a $377 million dispute involving the affiliate of a US based commodities trader. The Court found that SIH Partners LLLP, an affiliate of Pennsylvania-based commodities trader Susquehanna International Group LLP, owed taxes on approximately $377 million in additional income. The extra earnings stemmed from a $1.5 billion loan from Bank of America brokerage Merrill Lynch, which was guaranteed by SIH’s subsidiaries in Ireland and the Cayman Islands. The Tax Court’s ruling was based on regulations under Section 956 of the Internal Revenue Code, which states that U.S. shareholders must include their controlled foreign corporations’ applicable earnings, up to the amount of such a loan, in their own income when the foreign units invest in U.S. property. US vs SIH Partners LLLP181862p ... Continue to full case
Germany vs G GmbH, February 2019, Bundesfinanzhof, Case No IR 81/17

Germany vs G GmbH, February 2019, Bundesfinanzhof, Case No IR 81/17

A German company, G GmbH, owned 50% of A GmbH resident in Austria. The remaining 50% were held by non related shareholders, who at the same time acted as managing directors of A GmbH. G GmbH granted A GmbH a total of five loans with a duration of between nine and 362 days for a total amount of EUR …. The loans each bore interest at 5.5% pa. For security, different machines were assigned. In addition, by a contract dated 9 April 2003, G GmbH assumed a guarantee of EUR … for a loan from B Bank in Austria to A GmbH. On 22 January 2002 A GmbH made a partial payment in the amount of … EUR and on 16 June 2002 a further partial payment in the amount of … EUR back to G GmbH. Due to negative development in A GmbH, G GmbH on 31 December 2003, booked a partial depreciation on the loan in the amount ... Continue to full case
Germany vs G KG, February 2019, Bundesfinanzhof, Case No IR 51/17

Germany vs G KG, February 2019, Bundesfinanzhof, Case No IR 51/17

G KG, in which G GmbH a limited partner, was the sole shareholder of the Chinese A Ltd. In 2007 and 2008, a claim in the amount of EUR …, which still came from deliveries in the years 2004 and 2005, was open to this company. The claim was unsecured and interest-free. On December 20, 2007, the plaintiff waived EUR 1.00 against its debtor warrant against debtor warrants and, to this extent, booked these off in its trade balance. On 30 June 2008, the plaintiff wrote off the claim for continued worthlessness in its trade balance by EUR … and finally declared a debt waiver on 6 December 2008. The defendant and appellant (the Finanzamt – FA–) did not take into account the value adjustments in the context of the separate and uniform determination of the taxable amount and increased the profit due to the lack of interest on the receivable off balance sheet in the amount of 3% of ... Continue to full case
Netherlands vs B.V, July 2018, Hoge Raad Case No 17/04930 17/05713 17/05714

Netherlands vs B.V, July 2018, Hoge Raad Case No 17/04930 17/05713 17/05714

It follows from various Supreme Court judgments in the Netherlands that a loan is commercially irrational if no interest can be determined under which an independent third party would have been willing to grant the same loan. The consequence of a loan beeing deemed commercially irrational is that a loss is not deductible. This case addresses the implications of the Umbrella Judgement, in particular the question of how that judgment relates to case laws on unsecured loans and guarantees. The Advocate General concludes that the Umbrella Judgment is not applicable in this case and that the tax authorities has failed to demonstrate that an independent third party would not have been willing to enter a similar loan agreement. Click here for translation Nederland July 2018 ECLI NL PHR 2018 737 ... Continue to full case
Germany vs Hornbach-Baumarkt, May 2018, European Court of Justice, C-382/16

Germany vs Hornbach-Baumarkt, May 2018, European Court of Justice, C-382/16

In the Hornbach-Baumarkt case, a German parent company guaranteed loans of two related companies for no remuneration. The German tax authorities made an assessment of the amount of income allocated to the parent company as a result of the guarantee, based on the fact that unrelated third parties, under the same or similar circumstances, would have agreed on a remuneration for the guarantees. Hornbach-Baumarkt argued that German legislation was in conflict with the EU freedom of establishment and lead to an unequal treatment of domestic and foreign transactions since, in a case involving german domestic transactions, no corrections to the income would have been made for guarantees granted to subsidiaries. The company further argued that the legislation is disproportionate to achieving the objectives as it provides no opportunity for the company to present commercial justification for the non-arm’s-length transaction. The German Court requested a preliminary ruling from the European Court of Justice on these arguments. In May 2018 The European ... Continue to full case
Germany vs C-GmbH, December 2014, Bundesfinanzhof, Case No I R 23/13

Germany vs C-GmbH, December 2014, Bundesfinanzhof, Case No I R 23/13

C-GmbH was the sole shareholder of the I-GmbH. In 2000, I-GmbH, together with another company, set up a US company for the development of the US market, H-Inc., In which the I-GmbH held 60 per cent of the shares. H-Inc. had recived equity from the two shareholders and also received a bank loan of approx. $ 1.5 million (USD), which the shareholders secured through guarantees. As of December 31, 2003, the balance sheet of H-Inc. showed a deficit not covered by equity of approx. 950,000 USD. On June 30 , 2004,  I-GmbH became the sole shareholder of H-Inc. Then the bank put the H-Inc. granted loans due. Since H-Inc. was not able to serve the bank loan, C-GmbH paid the bank. As of December 31, 2004, the balance sheet of H-Inc. showed a deficit not covered by equity of approx. $ 450,000 , which at December 31 , 2005 amounted to approx. $ 1.6 million, as at 31 December 2006 $ ... Continue to full case
France vs. Carrefour, Feb. 1992, CE no 81690/82782

France vs. Carrefour, Feb. 1992, CE no 81690/82782

In the French Carrefour case, the French Supreme Court considered as arm’s length a rate of 0.25% for for a loan guarantee. The remuneration should be commensurate with the risk incurred as well as with the market value of this service, irrespective of the actual cost. Click here for translation Carrefour 1992_81690_82782_CE ... Continue to full case