Interest payments made to financial institutions are fully deductible. Interest payments made to other entities are deductible if they do not exceed the highest rate determined by the Financial Supervisor.
Article 118-1 of the Tax Code introduced a cap for interest deduction as from 1 January 2013. From that date, interest is deductible only if the corresponding debt does not exceed on average during the relevant tax period three times the net worth as determined on 31 December 31 of the previous year. Interestpaid on debt in excess of the above-mentioned ratio is not deductible for income tax purposes.