Interest limitation rules ("ILR"), as required by the EU Anti Tax Avoidance Directive, are set to be transposed into Irish law later this year and take effect from 1 January 2022.
ILR seek to restrict tax-deductible interest expenses to 30% of EBITDA in a given period.
The existing Irish interest deductibility rules will remain in effect after 1 January 2022 and taxpayers will need to compute tax liabilities by reference to the new ILR and the old deductibility rules. The Department of Finance acknowledges the complexity that will ensue and has sought stakeholder engagement by way of a Feedback Statement process. The first part of this process closed for public comments on 8 March 2021.