Interest Free Loans: How to Determine the Amount of the Adjustment?

In the Sté Fibusa ruling handed down by the Bordeaux Administrative Court of Appeal on November 22, 2022:
In cases of interest free loans constituting an indirect transfer of profits abroad, the amount of interest to be reinstated may be determined by distinguishing between funds borrowed to grant such advances and those previously available to the company.
For the former, the reinstated amount may be calculated by reference to the interest paid by the company to borrow the funds used for the advances. For the latter, the reinstatement amount may be based on the average interest rates for advances on securities published by the Banque de France.
The court’s approach leads to varying the reinstated amount depending on whether the disputed loans are financed by equity or debt.
Read the article of Théophile Trancart on the ruling, published in the Revue de droit fiscal on March 16, 2023.