THE BOSAL HOLDING CASE

The Bosal Holding Case

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July 2, 2014

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TABLE OF CONTENTS
• Overview
• Analysis

• Conclusion

The Bosal Holding Case

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July 2, 2014

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Overview
 Bosal Holding BV or “Bosal” is limited company established in the Netherlands and owner of holdings in various Netherlands and foreign companies (inside and outside European Union or “EU”). Those holdings range from 50 up to 100%. Bosal business consists in holding, financing and licensing activities.  In 1993, Bosal filed an application to the competent Netherlands tax authority to deduct interest charges amounting to 3.9 million gulden in connection with the financing of its holding in companies established outside the Netherlands but inside the EU.  Throught 1993 corporation tax assessment, the competent Netherlands tax authority was refused to grant such deduction, thus Bosal lodged an appeal in cassation to the Hoge Raad (Supreme Court). Then, the Hoge Raad requested a ruling to the European Court of Justice (ECJ).

The Bosal Holding Case

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July 2, 2014

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Overview
 The following is the ruling seek by the Hoge Raad to the ECJ related to the Bosal case:  Does Article 52…………………………………………preclude a Member State from granting a parent company subject to tax in that Member State a deduction on costs relating to a holding owned by it only if the relevant subsidiary makes profits which are subject to tax in the Member State in which the parent company is established?

 Does it make any difference to the answer to question 1 whether, where the subsidiary is subject to tax based on its profit in the Member State concerned but the parent company is not, the relevant Member State takes account of the abovementioned costs in levying tax on the subsidiary?

The Bosal Holding Case

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July 2, 2014

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Overview
 The ECJ examined the two