Reducing Debt-Equity Bias in Corporate Taxation

by name voted on 16.01.2024

Summary

This proposal aims to encourage companies to use more equity instead of debt by providing tax allowances for equity increases and limiting interest deductions, with special protections for SMEs.

9 16.01.2024

Report

economy

finance

taxation

european union

business and competition

Key points

The proposal aims to reduce the tax-related bias that encourages companies to choose debt over equity financing.
A new tax allowance will be introduced for companies that increase their net equity, calculated using a risk-free interest rate plus a small premium.
Small and medium-sized enterprises (SMEs) and medium-sized groups will receive a longer period of 10 years to deduct the equity allowance, compared to 7 years for large companies.
The directive will limit the amount of interest that can be deducted from corporate income tax for large companies.

Vote

PPE

S&D

Renew

Verts/ALE

ECR

ID

NI

The Left

Total

Documents (PDFs)

DRAFT REPORT on the proposal for a Council directive on laying down rules on a debt-equity bias reduction allowance and on limiting the deductibility of interest for corporate income tax purposes REPORT on the proposal for a Council directive on laying down rules on a debt-equity bias reduction allowance and on limiting the deductibility of interest for corporate income tax purposes Debt-equity bias reduction allowance and limiting the deductibility of interest for corporate income tax purposes

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