On 23 December 2020, the Finance Department published feedback statement, which considers the final ATAD measure, an Interest Limitation Rule, which will also be implemented in Finance Bill 2021. In Ireland, the general anti-abuse rule (GAAR) met the minimum ATAD standard. The ATAD-compliant Exit Tax and the CFC rules had already been introduced in Finance Act 2018. The Finance Act 2019 introduced the anti-hybrid rules. The remaining part of the fourth measure, additional rules to neutralize anti-hybrid mismatches, will be transposed by 1 January 2022, as required by ATAD. The Department of Finance will commence a separate process of stakeholder consultation on rules to neutralize anti-hybrid mismatches in early 2021, to be followed by the introduction of legislation in Finance Bill 2021. The consultation period will run until 8 March 2021. The interest limitation rule requirements are given as follows:
- It requires a limit on deductible interest of a maximum of 30% of ‘EBITDA’ per ‘taxpayer’. And, a notional local group can be considered to be a single taxpayer.
- Two “group ratio” options may be provided, which may allow a higher interest deduction to an individual company by reference to the position of the wider group.
- Member States have the option to allow taxpayers to carry forward interest that is subject to the restriction and that cannot be deducted in an accounting period for offset in a future period, and to either carry back disallowed interest for three years or carry forward excess interest capacity for five years.
