EU Tax Alert 207

1. Highlights in this edition

CJ judgment on whether Dutch interest deduction limitation rule is in line with EU law (X BV v Staatssecretaris van Financiën, Case C-585/22) On 4 October 2024, the CJ delivered its judgment in the case X BV v Staatssecretaris van Financiën (Case C-585/22) where it found that the Dutch interest deduction limitation rule of Article 10a Corporate Income Tax Act 1969 (CITA) is not in breach of EU law, as it pursues the legitimate objective of combatting tax fraud and tax evasion.

In its judgment, the Court found that: (i) Article 10a CITA creates a restriction to the freedom of establishment which can be justified because the legislation pursues the goal of combatting tax avoidance and its application is limited to wholly artificial arrangements; (ii) EU law does not preclude Article 10a CITA refusing the deduction of the whole interest of a loan that is devoid of economic justification and would have never been contracted, absent the