Russia’s Federal Arbitration Court of the North-West region has issued Ruling No. А52-4072/2012 on September 18, 2013 concerning the establishment by a sister company of thin capitalization rules to a loan issued.
Russian court practice already incorporates two cases by which the tax authorities successfully deprecate interest on loans from oversea companies under general ownership: the Naryanmarneftegas case and the Pirelli Tyre Services case. The decision of Naryanmarneftegaz case was based on a number of facts and the court allowed as indicating that in matter the loan was allowed and funded by a direct or indirect shareholder and not by the sister company and this considered as controlled inheritance for the objectives of thin capitalization rules in Russia. The Pirelli decision quoted the Naryanmarneftegas as a principle for considering a loan from a sister company as controlled liability but the decision did not file the existence of same facts regarding the approval and funding of the loan in the Pirelli case.
