On 11 May 2022, the European Commission published a draft Directive which is intended to mitigate the tax induced debt-equity bias in corporate investment decisions. Technically, this is to be achieved through, on the one hand, an allowance that provides for the deductibility of notional interest on equity and, on the other, by introducing further restrictions on the deductibility of interest on debt.
The Supreme Tax Court has confirmed that the provision disallowing a debt write-off from a company in which the creditor holds or held over 25% of the shares is to be taken literally.
