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Ireland Updates Guidance on Interest Limitation Rule — Orbitax Tax News & Alerts

Irish Revenue has issued eBrief No. 026/23 concerning updates to Tax and Duty Manual Part 35D-01-01 - Guidance on the Interest Limitation Rule. The rule, introduced by Finance Act 2021, is in line with the EU Anti-Tax Avoidance Directive (ATAD), limiting deductible interest expense to 30% of EBITDA, with disallowed interest allowed to be carried forward and deducted in future years.

The guidance is updated to reflect amendments made by the Finance Act 2022 in relation to:

  • Section 4.1 - Interest Equivalent;
  • Section 4.4 - Legacy Debt;
  • Section 5 - Relevant profit or relevant loss;
  • Section 9 - Long-term Public Infrastructure Project;
  • Section 11.4 - Further rules regarding deemed borrowing cost; and
  • Section 12 - Carry forward of total spare capacity.

The amendments are generally technical in nature and provide clarification on the application of the interest limitation rule.