Dutch Court of Appeal Denies Interest Deductibility on Convertible Loan in Private Equity Acquisition Structure

The authors discuss a recent judgment passed by the Amsterdam Court of Appeal on the deductibility of interest expenses incurred by a Dutch acquisition vehicle in respect of a convertible shareholder loan. The case relates to the acquisition of a Dutch clothing chain by a French private equity firm. The Court of Appeal considered the interest expenses to be non-deductible under the abuse of law concept.