Earnings stripping rules

The earnings stripping rules replaced existing thin capitalization
rules with general effect as of January 1 2008.

The earnings stripping rules apply in general to all types of debt
financing of sole proprietorships, partnerships, and corporations.
The scope of the new rules is far broader than the previous thin
capitalization rules as all third-party debt financing is included.
Interest expense is completely deductible from the tax base only
to the extent the taxpayer earns positive interest income in the
same financial year. Interest expense in excess of interest in-
come (net interest expense) is deductible only up to 30% of tax
EBITDA (so-called 30% rule).

Tax EBITDA is defined as taxable
proft before application of the earnings stripping rules, increased
by interest expenses and by fscal depreciation and reduced by
interest earnings.