Russia’s Arbitration Court of Appeal issued a decision on 24 February 2014 holding that a loan from a foreign related company of United Bakers Pskov LLC1 was subject to the thin capitalization legislation. This ruling by the Court was made on the basis of previous arguments in the Courts, especially the definition of “associated enterprises” as clarified in a previous case and in Article 9 of the double taxation treaty between Russia and Luxembourg. The treaty allows an adjustment to the income in respect of transactions between associated enterprises. The Court therefore came to the conclusion that the treaty allows the application of the thin capitalization rules.