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A company has enquired whether it must withhold tax on interest from shareholder loans that are not paid out but instead capitalised. The DGT has ruled that withholding must be carried out when the interest becomes due, regardless of whether actual payment is made.
Companies must ensure that withholding tax is applied to interest that has become due and payable, even if the interest is offset against debt or used for a capital increase rather than being paid in cash.
The tax team reviews your specific situation.
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