On 2 July 2021, the Finance Minister, Paschal Donohoe TD, launched a second Feedback Statement on transposition of the ATAD interest limitation ratio.
The Anti-Tax Avoidance Directive (ATAD) requires Member States to introduce an interest limitation rule (ILR). The ILR is a fixed ratio rule that seeks to link a taxpayer’s allowable net borrowing costs directly to its level of earnings, by limiting the maximum net deduction to 30% of earnings before tax and before deductions for net interest expense, depreciation and amortisation (EBITDA).
Due to the complexity of the ATAD ILR and its interaction with domestic legislation, an iterative approach is being taken to developing ILR legislation. This Feedback Statement builds on the November 2018 public consultation on implementation of the ATAD Anti-Hybrid rules and ILR and the December 2020 ATAD ILR Feedback Statement. The December 2020 Feedback Statement focused on the operation of the ILR on a single company basis. This current Feedback Statement responds to the observations of stakeholders and brings forward proposed draft legislative approaches to the ILR provision as a whole, including all the group elements and exclusion options.
