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Bosal - opportunities under new Dutch thin capitalisation rules

The European Bosal court case is set to raise a few questions in The Netherlands. Arthur Goedkoop and Tycho Surber of Deloitte & Touche examine what the response of the Dutch Ministry of Finance will be and what it means for Dutch and non-Dutch acquisitions.

The court ruling on the Bosal case is due on 18 September 2003 and is currently before the European court. The question is whether the Dutch rule - that companies cannot deduct interest paid on loans from their tax bill - is in accordance with EU law. If so, the M&A landscape in The Netherlands will change dramatically. In the case of a negative ruling, the country may see the introduction of a debt : equity ratio of 3:1, but the details of this have not been made publicly available. This introduction could well allow for greater opportunities, particularly for private equity investors.

Copyright © Deloitte & Touche 2003

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