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ARTICLE · 20 FEBRUARY 2015

BEPS - Action Point 4 On Interest Deductions And Other Financial Payments

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The OECD released its public discussion draft on Action Point 4 of the Action Plan on Base Erosion and Profit Shifting (hereafter "BEPS") concerning interest deductions and other financial payments.

LuxembourgTax
Bonn Steichen & Partners
Bonn Steichen & Partners

The OECD released its public discussion draft on Action Point 4 of the Action Plan on Base Erosion and Profit Shifting (hereafter "BEPS") concerning interest deductions and other financial payments.

According to the OECD, tackling BEPS requires a broader approach to the definition of "interest", in order to limit the risks of new rules being circumvented.

As such, the OECD believes that payments (i) on all forms of debt, (ii) that are linked to the financing of a company and (iii)that are determined by applying a fixed or variable percentage to an actual or notional principal over time, should be included.

This broader concept also includes so-called "economically equivalent payments" such as arrangement fees and guarantee fees as well as the non-limitative list below:

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