Interest Limitation Rule to be introduced in Finance Bill 2021

Jan 11, 2021

The Department of Finance published a Feedback Statement on the Interest Limitation Rule. The consultation process on the Interest Limitation Ratio (ILR) will take place in a two-stage process. The process is aimed towards the introduction of the ILR in Finance Bill 2021, with an effective date of 1 January 2022.

This Feedback Statement builds on the responses received to the 2018 public consultation on the implementation of the ATAD Anti-Hybrid rules and the ILR. It also sets out possible approaches to some of the technical aspects of the ILR.

The Department of Finance have set out a two-stage approach to the development of domestic ILR legislation:

  1. Develop a robust legislative approach to the operation of the ILR on a single company basis; and
  2. Develop legislative approaches to consider the notional local group and group ratio options.

This ILR Feedback Statement is therefore the first of two Feedback Statements on the ILR. The second Feedback Statement is intended to be published in mid-2021.

The Feedback Statement contains questions on technical and policy issues relevant to the ILR development. The Department of Finance have noted that the views of stakeholders will be important in ensuring that Ireland’s ILR, while meeting the ATAD standard, is clear, operable and consistent with the long-standing focus on taxation of activities with substance in Ireland.

The consultation period runs to Monday, 8 March 2021. The CCAB-I provided a submission as part of the 2018 process. Tax News subscribers who wish to have their views of the first Feedback Statement considered as part of the CCAB-I submission can email tax@charteredaccountants.ie.