Limit base erosion via interest deduction and others
ISSN: 0165-2826
Year of publication: 2015
Volume: 43
Issue: 1
Pages: 58-71
Type: Article
More publications in: Intertax
Sustainable development goals
Abstract
BEPS Action 4 focuses on excessive deductible interest and other financial payments, thus recommending the design of rules in order to prevent base erosion through the use of interest payments and double non-taxation both from an inbound and an outbound perspective. This article deals with some relevant questions related to this topic, such as the grounds for justification, the limitations based on classification and the financial expenses related to exempted income, with special reference to some relevant experiences and case law in the European Union. Taking into account that some tax jurisdictions have enacted provisions in this respect, the authors also analyse some comparative examples as well as the main concerns related to legal principles and taxpayers' position and Tax Treaty issues.