The ‘Non-Businesslike Loan’: A New Doctrine for the Tax Treatment of Equity and Debt Capital in the Netherlands

Abstract:

The (difference in) taxation of equity and debt capital is in many countries a regularly recurring subject of debate, legislation, and case law; in the Netherlands this is not different. A new phenomenon has recently arisen in Dutch case law that casts new light on this discussion. In literature, this phenomenon is referred to as the 'non-businesslike loan', best described as a sort of 'hybrid loan' that is partly treated as debt capital and partly as equity capital for tax purposes. In this contribution, we offer the international reader an introduction to the doctrine of the non-businesslike loan. We discuss the Dutch principal rules of the qualification of capital loans, the qualification of a loan as a 'non-businesslike loan', and address the treatment of the interest and write-downs on a non-businesslike loan. Finally, we highlight some international aspects of the non-businesslike loan.