The non-arm's length loan under the rules on ‘making assets available’: what is unusual and undesirable? 

The Supreme Court judgment of May 9, 2008, ("BNB 2008/191") placed the non-arm's length loan in the public eye. The Supreme Court ruled that the write-down of a non-arm's length loan was non-deductible for corporate income tax purposes. In this case, non-arm's length is defined as a loan that has a bad debt risk to the extent that a unrelated third party would not have granted the loan.  

Since the BNB 2008/191 ruling, the non-arm's length loan has now made an appearance in the context of the income tax rules on  ‘making assets available’ ("tbs rules"). Several Courts of Appeals and also Advocate-General Niessen have concluded that a substantial interest shareholder cannot deduct a write-down on a non-arm's length tbs loan in Box 1. However, there are different opinions on this subject to be found in literature and in case law. The question also arises to what extent non-arm's length loans relate to another issue particularly important for the tbs rules: the making available of assets in a way that is considered unusual in common usage. In this article, the authors investigate the current status of non-arm's length loans in the tbs context.

Original title: De onzakelijke lening binnen de terbeschikkingstellingsregeling