Tag: Deemed dividend
Dividend is a transfer of value from the company to a shareholder resulting from the shareholding relationship. Dividends are sometimes “deemed” to have been paid. Any transfer of services or assets by a company to a shareholder (or their associate) for less than market value will give rise to a taxable deemed dividend.
Deemed dividend may arise in these situations:* excessive remuneration paid to a shareholder-employee* interest-free or low-interest loans* transfers of property for below-market value* rental below market value.
Netherlands vs Lender BV, June 2019, Tax Court, Case No 17/871
The question at issue was whether a tax adviser had acted in accordance with the requirements of a reasonably competent and reasonably acting adviser when advising on the so-called royalty routing and its implementation and when giving advice on trading. Click here for other translation ...
US vs SIH Partners LLLP, May 2019, US Third Circuit of Appeal, Case No 18-1862
In this case the Third Circuit of Appeal upheld the tax courts prior decision i a $377 million dispute involving the affiliate of a US based commodities trader. The Court found that SIH Partners LLLP, an affiliate of Pennsylvania-based commodities trader Susquehanna International Group LLP, owed taxes on approximately $377 million in additional income. The extra earnings stemmed from a $1.5 billion loan from Bank of America brokerage Merrill Lynch, which was guaranteed by SIH’s subsidiaries in Ireland and the Cayman Islands. The Tax Court’s ruling was based on regulations under Section 956 of the Internal Revenue Code, which states that U.S. shareholders must include their controlled foreign corporations’ applicable earnings, up to the amount of such a loan, in their own income when the foreign units invest in U.S. property ...