A married couple have successfully challenged an assessment by the Tax Authorities for a loan not being useful. The court ruled that it is an unusual loan does not mean that it is also an unusual loan.
In 2003, a couple with a joint architectural office provided a loan of € 450,000 to their daughter-in-law. He then lends the amount to the son. Agreements are later made about interest and repayment, according to the loan agreement. But those agreements are not forthcoming. To provide the loan, the couple took out two mortgages on their own home for a total of € 335,000. The rest is paid from the savings account and the business assets.
The son puts the loan in a bad credit in which he has an interest. Bad credit is again a subsidiary of a group that recorded a negative equity of nearly one million in 2003. However, an accounting firm foresees a profit of almost four tonnes for 2007. Between 2003 and 2005, the group sold various activities, including the activities of the bad credit.
Agreements will be made in 2006 on repayment and interest payment for the loan. A life insurance policy is also taken out. During the following years, arrears arise in the payment of interest. The lending couple includes the claim up to and including 2011 in the calculation of the box 3 income.
Not or not?
For 2012 and 2013, the Tax and Customs Administration imposes attacks on the couple. Objections are made to this. In court, the question arises whether there is an impractical loan. That is not the case, according to the couple: at the time the loan was granted, there was a legitimate expectation that the interest and repayment would be received in time. According to the Tax Authorities, the loan is not required, so that the debtor risk is in the private sphere. This is evident from the socially unusual provision and the combination of actions and conditions under which the loan was concluded.
Risk that someone else does not take
The court considers that when issuing an improper loan, a debtor risk is run that an independent third party would not have taken. “Except in special circumstances, it must be assumed that the lender has accepted this risk with the intention of serving the interest of the affiliated company in the capacity of shareholder.”
A loss on such a business loan cannot be charged to the result.
The court finds that a socially unusual loan is not by definition also a non-commercial loan. The tax authorities believe that this is derived from a judgment of the Supreme Court. But according to the judge, that judgment is about the possibility that a socially unusual set of actions may consist of components that are not, in themselves, non-essential. According to the court, the Tax and Customs Administration has not substantiated how the assumed non-commercial nature of the components would always follow from the social unusual nature of the assembly.
The fact that there are unusual conditions and poor financial conditions does not mean that no interest can be determined under which an independent third party would have been prepared to grant the same loan, under otherwise the same conditions and circumstances.