2022-08-02-KPMG_s_EU_Tax_Centre-Euro_Tax_Flash_from_KPMG_s_EU_Tax_Centre_3页_272kb

Background

The European Commission proposed the DEBRA Directive to reduce tax bias between debt and equity and limit interest deductibility for corporate income tax purposes, aiming to create a level playing field and help companies build robust funding structures. The proposal applies to taxpayers in EU Member States starting from January 1, 2024, and requires transposition by December 31, 2023 based on Article 115 of the TFEU.

KPMG's Contribution

KPMG welcomes the initiative's goal to address debt-equity bias but raises concerns about the need for additional clarifications to ensure legal certainty, reduce administrative burdens, and avoid redundancy with existing EU Anti-Tax Avoidance Directive (ATAD). Key issues include determining the equity allowance base, carry forward and recapture mechanisms, anti-abuse measures, interaction with ATAD rules, transitional periods, and group scenarios.

Next Steps

The Directive requires Council unanimity for adoption, with Member States transposing the rules into domestic law by 2023. After summer recess, discussions will continue in the Council working group, with formal adoption contingent on the European Parliament's opinion and unanimous Council vote.

ETC Comment

The DEBRA proposal is not a top priority, may face delays due to potential timeline extensions, and could undergo substantial changes based on Council deliberations and consultation responses, with uncertainty on unanimous support.