Commission Proposes Tax Incentive for Equity

Published 4 July 2022

PrintCategory: Taxation / VAT

On 11 May 2022, the European Commission has presented a proposal for a directive providing for a debt-equity bias reduction allowance, or DEBRA, to help businesses access the financing they need and to become more resilient. The measure will support businesses by introducing an allowance that will grant to equity the same tax treatment as debt.

The proposal stipulates that increases in a taxpayer’s equity from one tax year to the next will be deductible from its taxable base, similarly to what happens to debt.

The proposal includes certain anti-tax avoidance rules to ensure tax fairness.

Next steps: The proposal is open for feedback until 29 July 2022.

The proposal is available here.

 


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