Compare the tax implications of debt and equity financing
A foreign investor carrying out business activities in Germany
should compare the tax implications of debt and equity fnanc-
ing.
While the distribution of dividends is not tax-deductible,
interest is in principle deductible under German tax law. Howev-
er, the deduction of interest expense is limited by the German
earnings stripping rules.
Under the earnings stripping rules,
interest expense is fully deductible for tax purposes to the extent
of interest revenue. In general, net interest expense (interest
expense exceeding interest revenue) is deductible only up to
30% of EBITDA. For further details on the German rules limiting
interest deductions.
EU Forecast
euf:ba.18g:69/nws-01