The European Commission has on May 11, 2022. proposed a debt-equity bias reduction allowance, or DEBRA, to help businesses access the financing they need and to become more resilient. This measure will support businesses by introducing an allowance that will grant to equity the same tax treatment as debt. The proposal stipulates that increases in a taxpayer’s equity from one tax year to the next will be deductible from its taxable base, similarly to what happens to debt.
This initiative is part of the EU strategy on business taxation, which aims to ensure a fair and efficient tax system across the EU, and contributes to the Capital Markets Union, making financing more accessible to EU business and promoting the integration of national capital markets into a genuine single market.
A press release and Q&A are available online