The French tax authority has updated the interest rates used to define the deductibility of interest payments made to shareholders. These updates are pertinent to companies with fiscal years ending between 31 December, 2023, and 29 June, 2024.
Generally, any portion of interest payments exceeding the specified rates are non-deductible unless documentation can demonstrate that the interest rate applied is at arm’s length.
The updated rates for the specified periods are as follows:
- For fiscal years ending between 31 December, 2023, and 30 January, 2024, the rate is 5.57%.
- For fiscal years ending between 31 January, 2024, and 28 February, 2024, the rate is 5.70%.
- For fiscal years ending between 29 February, 2024, and 30 March, 2024, the rate is 5.81%.
- For fiscal years ending between 31 March, 2024, and 29 April, 2024, the rate is 5.88%.
- For fiscal years ending between 30 April, 2024, and 30 May, 2024, the rate is 5.92%.
- For fiscal years ending between 31 May, 2024, and 29 June, 2024, the rate is 5.96%.
Additionally, the alternative quarterly rate for Q1 2024 is set at 5.97%. These rates are calculated by the Central Bank of France, based on the average annual interest rates charged by financial institutions on medium-term variable rate loans with durations of two years or more.
