Related party guarantees are often required when lenders make loans to privately owned groups. Such guarantees can cause significant problems for the Corporate Interest Restriction, as interest can only be deducted under the fixed ratio. In addition, non-arm’s length interest may not benefit from relief from withholding tax under a double tax treaty. Due to the guarantee, a compensating adjustment may not be available under domestic rules.
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Related party guarantees are often required when lenders make loans to privately owned groups. Such guarantees can cause significant problems for the Corporate Interest Restriction, as interest can only be deducted under the fixed ratio. In addition, non-arm’s length interest may not benefit from relief from withholding tax under a double tax treaty. Due to the guarantee, a compensating adjustment may not be available under domestic rules.
If you are not a subscriber, subscribe now to read this content.
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