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 30 June 2024 and 29 September 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 30 June 2024 and 30 July 2024 – 5.96%
- For fiscal years ending between 31 July 2024 and 30 August 2024 – 5.97%
- For fiscal years ending between 31 August 2024 and 29 September 2024 – 5.97%
Additionally, the alternative quarterly rate for Q2 2024 is set at 5.90%. 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.
