The Government has proposed that loans given from limited liability companies to personal shareholders shall be deemed fiscally as dividend. Dividend is taxable for the personal shareholder.
The new rules will come into force 7 October 2015. The proposal will hit new loans in particular but also existing loans will be comprised to the extent they are extended beyond the originally agreed due date or to the extent a further extension of credit takes place (e.g. connected to a line of credit).
The Government further proposes that payment of loans that have previously been taxed as dividend be deemed as contribution of new capital by the shareholder. This means that the repayment amount will be distributed between the shares of the shareholder and added to the base cost of the shares.
The proposal gives the Ministry of Finance the authority to pass exemptions from the principal rule. Such exemptions my for instance apply to loans from a bank to a person which is also a shareholder in the bank.
