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International review: key developments in 2012

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Belgium: Until 2011 Belgium only applied its thin capitalisation rule to the payment of interest to a beneficial owner established in a tax haven. In 2012 Belgium strengthened its rule (5:1 debt: equity ratio) and extended it to interest paid to group companies. Companies are deemed to belong to the same group if one company has decisive influence over another company or if both companies belong to a consortium. If a loan is guaranteed or financed by a third party that party will be deemed to be the beneficial owner if the main purpose of that guarantee or financing is tax avoidance. The deduction of interest paid on debt will be disallowed if and to the extent of the excess the total amount of...

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