Administrative Tribunal – 30 March 2023 (n. 45984)

The non-deductibility of corporate expenses and subsequent application of a withholding tax on the grounds of hidden dividend qualification: it should be demonstrated that a “special” relationship between the (i) payee and (ii) a shareholder or an interested person exists, and that it can be proven and documented that the payee has granted an advantage which exceeds arm’s length terms and conditions.

Abuse of law and carried forward tax losses: The use of a company, having substantial tax losses, in order to conduct a taxable real estate transaction, while such a company has been dormant for a few years and had no such activity prior to that, is considered as an abuse of law for tax purposes, since it allowed a reduced overall tax cost for the company’s shareholder. The consequence is that such carried-forward losses are denied for such a transaction.

Administrative Tribunal – 28 March 2023 (n. 44851)

In the context of a company car: the use of a leased car was requalified as hidden dividend distribution granted to the company’s sole shareholder (subject to 15% withholding tax and non-deductibility of leasing expenses linked to such car). Why? The vehicle logbook as well as client bookings were poorly documented and led to believe that the car was used only for private purposes.

Administrative Tribunal – 22 November 2022 (n. 43535)

Payments made under a total return swap, where the receiver is annually awarded 85% of the net profits from a Luxembourg company (in exchange for a fee and the obligation to provide interest-free financing) are treated as a hidden dividend distribution when the payee is the beneficial owner of the company and such remuneration is not supported by properly documented transfer pricing study.

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