DEBRA (& ILR) – The Commission’s New Tax Initiative to Create a Level Playing Field for Debt and Equity

On 11 May 2022, the European Commission published a proposal for a Council Directive laying down rules on a debt-equity bias reduction allowance and on limiting the deductibility of interest for corporate income tax purposes. In this article, the authors provide an overview of the key aspects of the Proposed Directive, highlight inconsistencies within the proposed text and identify a number of open questions where the authors believe further clarity is required.