In a most recently published decision, the Supreme Tax Court commented on Section 8b (3) Corporation Tax Act which deals with a prohibition on deductions (such as the write-off in case of impairment of loans) in case of tax-exempt dividend income received by a corporation from shares held in another company. In addition, the court held that the disallowance is not applicable where a natural person is a related party to the company.
The Supreme Tax Court has held that a refusal to recognise a related party loan write-off, does not preclude the tax office from treating the write-off of the accumulated interest as a further hidden distribution.
The Supreme Tax Court has held that an employee can write off a bond issued by his now insolvent employer as an expense of earning income if he accepted the bond as the only possible remuneration for work down.
The Supreme Tax Court has held that the write-off of a shareholder loan held as a business asset is fully deductible by the income taxpaying holder even if the loan is to be seen as a substitute for share capital
