European Commission proposes tax incentive for equity

On 11 May 2022, the European Commission published a proposal for a new Council Directive that aims to encourage businesses to attract equity funding instead of debt. The proposal introduces an additional interest deductibility limitation (on top of the existing earnings-stripping rules) and allows taxpayers to deduct an allowance based on equity increases. These rules are envisaged to come into effect as of 1 January 2024.

Source: European Commission

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