Why is this important?

Following the previous strict approach to the deduction of interest charges related to debt-leveraged distributions, the application of the asset stripping theory was accepted as proof that the finality condition in Article 49 ITC 92 is fulfilled. 

In both cases, the taxpayer successfully demonstrated that the interest charges were incurred to obtain or preserve taxable income by showing that the external financing allowed them to retain their income-generating assets, rather than having to sell or transfer those assets to proceed with the distribution. Notwithstanding this positive case law, the Belgian tax administration is expected to maintain its stringent position in this respect for the foreseeable future.

Read the full article in the latest edition of Fiscale Actualiteit (available only in Dutch)