Asymmetric debt-equity swap: Court of Appeal rules in favor of tax authorities
On 26 February 2019, the Court of Appeal of Ghent ruled on the income tax treatment of an asymmetric debt-equity swap. The Court decided that both the contributing company and receiving company have to apply the same value. In the case at hand, a company A had a receivable of 1000 on its subsidiary B,
Positive ruling on deductibility of interest costs on loans contracted in order to finance capital reduction in case of an ‘over-capitalised’ company
The Belgian ruling office recently published a positive decision deciding that interest costs related to the intercompany loan are deductible for tax purposes since the costs are borne by the company with the purpose to preserve or generate taxable income. In the case at hand, a factoring company with ‘an excessive amount of equity’ is
Loss limitation in case of a tax neutral merger: Supreme Court dots the i’s and crosses the t’s
Carried forward tax losses of both the absorbed and absorbing company are subject to limitation upon a tax neutral merger. As regards tax losses of the absorbing company, it is generally accepted by tax practitioners that the loss limitation rule only applies to prior year tax losses (i.e. losses reported in the latest tax return
Negative ruling highlights pitfalls of pre-deal carve-outs through partial demergers
In a recent decision, the Belgian ruling office rejected a pre-deal carve-out of real estate through a tax neutral partial demerger followed by a tax exempt transfer of shares of the operating company. Though the ruling does not particularly divulge novel views, it has the merit of highlighting common pitfalls related to these type of
CJEU holds German RETT exemption for group restructurings not to be State aid in upstream merger case
On 19 December 2018, the Court of Justice of the European Union (CJEU) issued its judgment in the case of A-Brauerei (C-374/17). A brief overview of the judgment can be found via this PwC EUDTG Newsalert – 20 December 2018 (CJEU holds German RETT exemption_ for group restructurings not to be State aid in upstream merger_ case)
VAT deduction on deal fees for an aborted transaction, and not for an intended sale of shares
Recently, the CJEU decided on two important cases with respect to the VAT deduction on deal fees (see C-249/17 Rynair Ltd. And C-502/17 C&D Foods Acquisition) in a seemingly opposing manner. Ryanair case In the Ryanair case, deal fees were incurred in relation to a failed takeover of a competitor. Ryanair claimed input VAT deduction
No VAT deduction on deal fees for an intended (not realized) sale of shares
The holding company C&D Foods Acquisition, part of the Arovit group, incurred deal fees in relation to an envisaged but not realised sale of all shares of its sub-subsidiary. C&D Foods acquisition provided taxable services to its sub-subsidiary and claimed input VAT deduction on the costs incurred. The CJEU referred to the Becker case (C-104/12,
VAT deduction on deal fees for an aborted transaction
Ryanair incurred considerable deal fees in relation to an envisaged takeover of a competitor. The takeover failed. Ryanair claimed input VAT deduction on the professional costs incurred based on its intention to perform taxable transactions with input VAT credit. In relation to deal fees, generally, input VAT deduction is allowed if management services against consideration
