Financial Interest Tax Deductions Simplified in French Budget

France’s multi-layer regime to limit interest deductions would be reduced to one under the country’s 2019 budget draft.

In what would be a clear improvement for companies, the draft budget would simplify a complex system that increasingly limits the ability to use financial interest deductions to offset corporate tax. The ability to write off the interest paid on loans makes it easier for companies to fund operations.

Simpler tax rules on interest deductions could help leveraged buyouts and other corporate transactions, several Paris-based practitioners said.

The draft would impose an interest deduction limit of 30 percent of EBITDA—earnings before interest ...