France: anti-abuse measure on indebtedness involving related parties

On 25 September 2013, the French government released the key measures of the draft Finance Bill for 2014 that would notably affect French companies. The provisions include an additional limitation to the deduction of interest paid on loans granted by related parties.

If enacted, the new limitation will be applicable for financial year closing as from 25 September 2013, which means this measure will have a retroactive effect.

The tax deduction of interest paid by a French company is currently subject to several rules (thin capitalisation rules; interest rate limit test; interest barrier rule)…

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