On 29 June 2012, the Dutch Supreme Court (Hoge Raad der Nederlanden) gave its decision in X BV. v. the Tax Administration (Case No. 11/00482) concerning the calculation of the non-deductible interest under the Dutch thin capitalization rules. Details of the case are summarized below. (a) Facts. The activities of X BV (the Taxpayer) consist of borrowing money and the holding and financing of participations. Almost all (98%) of the borrowed loans were granted by the Taxpayer's shareholders, who were resident in Curaçao. The Taxpayer deducted the full amount of interest paid on those loans. The tax inspector, however, denied part of...