Exceeding borrowing costs (the amount by which the deductible borrowing costs - interest expenses on all forms of debt, other costs economically equivalent to interest and expenses incurred in connection with the raising of finance - of a taxpayer in terms of the Income Tax Act, were it not for the provisions of this Rule, exceed taxable interest revenues and other economically equivalent taxable revenues that the taxpayer receives) shall be deductible in the tax period in which they are incurred only up to thirty per cent (30%) of the taxpayer's EBITDA.

The taxpayer may carry forward, without time limitation, exceeding borrowing costs and, for a maximum of five (5) years, unused interest capacity, which cannot be deducted in the current tax period.


Notwithstanding the general rule above, the taxpayer may:

  • Deduct exceeding borrowing costs up to three million euro (€3,000,000);
  • Fully deduct exceeding borrowing costs if the taxpayer is a standalone entity (a taxpayer that is not part of a consolidated group for financial accounting purposes and has no associated enterprise or permanent establishment).


Costs incurred on loans which were concluded before 17 June 2016 are excluded from the scope of this rule, but the exclusion shall not extend to any subsequent modification of such loans. The same exclusion applies to costs incurred on loans used to fund certain long-term public infrastructure projects.

There is also full deductibility of exceeding borrowing costs if the taxpayer can demonstrate that the ratio of its equity over its total assets is equal or higher than the equivalent ratio of the group (if the taxpayer is a member of a consolidated group for financial accounting purposes).

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