Keywords
Summary

Keywords

++++

Tax provisions - Harmonization of laws - Indirect taxes on the raising of capital - Granting of an interest-free loan to a company by one of its members - Subjection to capital duty - Whether permissible - Basis of assessment - Interest saved

(Council Directive 69/335, Art. 4(2)(b) )

Summary

Article 4(2)(b) of Directive 69/335, concerning indirect taxes on the raising of capital, allows the Member States to subject to capital duty an interest-free loan granted to a heavily over-indebted capital company by one of its members on the basis of its utility value, that is to say the amount of interest saved, which is to be determined by the national court.

Owing to the resultant saving in interest, the grant of such a loan leads to an increase in the company' s assets and by helping to increase its economic potential is capable of increasing the value of the company' s shares.