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Alexander Tale

Doctoral student

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New Targeted Interest Deduction Limitation Rules Post Lexel

Author

  • Alexander Tale

Summary, in English

Both the European Union (EU) Directive implementing the OECD’s Pillar Two and the proposal for a debt-equity bias reduction allowance (DEBRA) feature rules that target and limit interest deduction as the need for these still exists. However, in case C-484/19 Lexel from 2021, the Court of Justice of the European Union (CJEU) struck down the Swedish targeted interest deduction legislation of 2013 applying to loans between associated companies. The Court considered the legislation to constitute an unjustifiable restriction of the freedom of establishment. It essentially stated that only wholly artificial arrangements could be the object of the targeted interest deduction rules while, at the same time, concluding that transactions carried out at arm’s length cannot be considered artificial or fictitious arrangements. After Lexel, the question is whether targeted interest deduction rules that are drafted with the objective of combating tax base erosion have any future, or must Member States only rely on the application of anti-abuse rules or targeted interest deduction rules mandated by secondary EU law?

Department/s

  • Lund Tax Academy
  • Department of Business Law

Publishing year

2023-03

Language

English

Pages

335-348

Publication/Series

Intertax

Volume

51

Issue

4

Document type

Journal article

Publisher

Kluwer Law International

Topic

  • Law (excluding Law and Society)

Keywords

  • Tax law
  • EU-law
  • Taxation
  • Skatterätt
  • EU-rätt
  • Beskattning

Status

Published

Project

  • The right to implement independent corporate taxation: group taxation, interest deductions, BEFIT, the global minimum tax, and the legal status of OECD documents

Research group

  • Lund Tax Academy

ISBN/ISSN/Other

  • ISSN: 1875-8347