Recently, France has published interest rates for entities whose financial year (FY) ended between 31 December 2019 and 30 March 2020, which are used to determine the deductibility of interest payments to shareholders. The portion of interest payments exceeding the following rates is generally not deductible unless documentation is provided demonstrating that the interest rate applied is at arm’s length. The period in which the fiscal year ends, and the applicable rates are as follows:
Rates for the period from 31 December 2019 to 30 March 2020 are:
• Between 31 December 2019 and 30 January 2020 – 1.32%;
• Between 31 January 2020 and 28 February 2020 – 1.32%; and
• Between 29 February 2020 and 30 March 2020 – 1.31%.
The interest rates are fixed by the French central bank on the basis of the average annual interest rates of the financial institutions for medium-term variable rate loans with a term of more than 2 years.
