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ARTICLE · 27 MARCH 2012

The Notional Interest Deduction - Still Under Scrutiny

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Eager to cut the budget deficit, Belgium’s Prime Minister Elio Di Rupo has proposed several measures to curtail the notional interest deduction (NID). In addition, in its opinion of 26 January 2012, the European Commission urged Belgium to revise the manner in which the NID is calculated in order to prevent further violation of freedom of establishment (Articles 49 and 54 TFEU) and the free movement of capital (Article 63 TFEU).

European UnionStrategy
Pascal Faes
Pascal Faes
David Mussche
David Mussche

Eager to cut the budget deficit, Belgium's Prime Minister Elio Di Rupo has proposed several measures to curtail the notional interest deduction (NID). In addition, in its opinion of 26 January 2012, the European Commission urged Belgium to revise the manner in which the NID is calculated in order to prevent further violation of freedom of establishment (Articles 49 and 54 TFEU) and the free movement of capital (Article 63 TFEU). Will the NID weather the storm of European scrutiny?

Main issue: exclusion of equity allocated to foreign permanent establishments (PEs) and foreign real estate from the scope of the NID

On 26 January 2012, the European Commission officially asked Belgium to amend its legislation on the NID. The Commission is of the opinion that excluding the net equity allocated to the foreign PEs of Belgian companies from the basis on which the NID is calculated violates freedom of establishment (Arts. 49 and 54 TFEU) and that excluding the net equity

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