The Commission sent an opinion to Ireland requesting that interest limitation rules as required by the EU’s Anti-Tax Avoidance Directive (ATAD) be transposed into law. Ireland has held that its current interest limitation rules are ‘equally effective’ and notified derogation requests under EU law. Read the European Commission infringements package.

Ireland’s existing interest limitation rules are different in structure to the ATAD rule. In Ireland a tax deduction for interest is only available where the relevant borrowings are used for certain limited qualifying purposes. The strict qualification criteria are supplemented by extensive anti-avoidance provisions relating to connected party transactions. According to the Irish Government, it is their opinion, supported by case study data, that Ireland’s existing interest limitation rules are at least equally effective to the rules contained in the EU Directive.