Treatment of Currency Losses and Interest-Free Loans Under the Dutch Participation Exemption

The case discusses whether the participation in an Irish subsidiary of a Dutch company qualifies as a low-tax participation and thus is excluded from the Dutch participation exemption benefit. In calculating the tax burden of the Irish subsidiary, the Supreme Court of the Netherlands has discussed the impact of foreign currency losses and the reclassification of an interest-free loan as hidden dividend distribution. In this article, Gabriela Capristano Cardoso provides an analysis of the case 17/03918 decided by the Supreme Court of the Netherlands on November 2nd, 2018, and discusses its implications in the international tax environment.