Traditionally, the application of thin capitalisation rules
has triggered a number of questions which have been extensively
debated by tax commentators. Some of them have been clarified
by the Spanish courts or the Directorate-General of Taxes in
various rulings, but some others have remained open to
Two Supreme Court judgments, both rendered in the course of
2011 (March 17 and November 2, respectively), have provided
interpretation guidelines on two of those controversial issues
relating to the application of the thin capitalisation rules,
The compatibility of the domestic thin capitalisation
regulations and the non-discrimination clause contained in tax
treaties; and The delimitation of the concept of indirect
indebtedness in cases where the related party is not the lender
but the guarantor of the loan. Thin capitalisation and tax
treaties A previous judgement of the Supreme Court, dated
October 1 2009, had already declared the incompatibility of the
thin capitalisation rules...
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