The tax authorities recently issued an internal binding information (1195/05) on the interpretation of the thin capitalization rules vis-à-vis the European Court of Justice (ECJ) ruling on the Lankhorst-Hohorstcase (C-324/00). The binding information mentions that interpretative decisions of the ECJ, unless otherwise mentioned, have ex tunc effect, i.e. from the entry into force of the relevant tax provision. As a result, the Portuguese thin capitalization rules (both in their current and previous text) should be interpreted in light of the Lankhorst-Hohorst ruling, i.e. as not applying to EU-related entities. As such, tax inspectors are requested not to disallow excessive interest...