On 10 August 2026, the VMI revised the consolidated commentary on Article 40(3) of the Corporate Income Tax Law, which regulates the thin capitalization and interest deduction limitation rules (aligned with ATAD Article 4). The update provides detailed calculation methodologies for the EBITDA-based interest capacity and the treatment of excess borrowing costs.
Key Takeaways
- EBITDA Calculation Guidance: The commentary specifies the components of tax EBITDA, including adjustments for non-deductible expenses, tax-exempt income, and the treatment of foreign exchange gains/losses.
- Carryforward and Carryback Rules: Excess borrowing costs can be carried forward indefinitely, while unused interest capacity can be carried forward for five years; the commentary clarifies the interaction with group ratio rules.
- Group Ratio Election: Multinational groups may elect to apply the group ratio rule instead of the fixed 30% EBITDA threshold, subject to notification and documentation requirements detailed in the update.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
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