The Limitation of Interest Deduction and the Tax Treatment of Groups: Time for a Change in Portugal?

Journal
Martins, A. (António)
International; Portugal
Bulletin for International Taxation 2025 (Volume 79), No. 9/10
Format/Price
JournalUSD 45

Council Directive 2016/1164 (ATAD) states that if a taxpayer is a member of a group, then it may be given the right to fully deduct interest expenses if its ratio of equity over total assets is equal to, or higher than, the equivalent ratio of the group. The Portuguese limitation rule does not provide this option, relying instead on an EBITDA-based clause. This article advocates for a change.