The application of the WEV (waarde in het economische verkeer) rule is particularly relevant if the non-corporate loan is interest-free or the agreed interest is owed. The interest to be taken into account for tax purposes is then determined on the market value of each interest period at the time it falls due. The assessment of the business nature of the money supply can take place both at the time of supply and during the term. This test must be carried out on both sides, from the perspective of the lending and borrowing company. Referring to what has been said above with regard to the perspective of the entities involved, a situation of an affiliated lender granting a loan to the borrowing group entity that subsequently is insufficiently creditworthy may also constitute a ‘non-business loan’ in the approach of the aforementioned judgment. In my opinion, the same applies to the borrower who, as a result of the linked intra-group loan, sees his creditworthiness drop to a level below BBB-. The Supreme Court considered that the level of interest on a ‘non-bankrupt loan’, a loan with a non-bankrupt default risk, should be determined by reference to the creditworthiness of the lending entity. The Supreme Court did not explain in its judgment how to deal with the creditworthiness of the lending group entity compared to the creditworthiness of the borrowing entity. In case of a higher creditworthiness of the lender compared to the creditworthiness of the borrowing entity, the interest rate that would be charged by the lending group entity itself will be considered as the appropriate interest rate to be taken into account for tax purposes. If the lending group entity does not have a better credit rating than the borrowing group entity, i.e. if it is not itself investment grade, the notional guarantee does not, in principle, add anything. In that case, no more than the risk-free interest rate on the loan can be taken into account. English translation of the opinion issued by the Attorney General – I recommend that the appeal in cassation is declared to be unfounded Judgement of the Supreme Court The Supreme court decided against the opinion of the Attorney General and concluded that the appeal of X B.V was well founded. Click here for English translation Click here for other translation ...