Finance Bill 2011: new proposal for extensive thin capitalization rules

On 10 November 2010, the Finance Commission of the Second Chamber of the Parliament (Sénat) adopted an amendment to the Finance Bill 2011, which extends the thin capitalization rules to interest paid to third parties if the related loan is secured by a related party. Currently, the thin capitalization rules are restricted to interest paid to related parties. If the amendment was to be adopted, third-party loans secured by a company belonging to the same group as the borrower (e.g…