Guidance on the Interest Limitation Rule (ILR) published
Earlier this year the A&L Goodbody Tax team published an article (Implementation of the Interest Limitation Rule (the ILR) in Ireland), detailing the principal aspects of the ILR and its practical implementation pursuant to Finance Act 2021.
Since the enactment of the ILR, the Irish Revenue Commissioners, in consultation with interest parties, have been working on accompanying guidance. That guidance was published on 4 August 2022 and sets out information in relation to, among other things, various terms, phrases and definitions necessary for the operation of the ILR including the meaning of 'interest equivalent, the calculation and impact of EBITDA, calculation and application of the space capacity concept, the application of group reliefs, the application of the ILR to interest groups, etc.
This publication focuses on the concept of interest equivalent income and the practical examples referenced in the guidance. It also looks at a number of useful example scenarios and provides guidance as to whether particular payments in those scenarios should be considered interest equivalent or not, these scenarios are referenced in the publication under the following headings:
- Discount/Arrangement Fee/Premium
- Guarantee Fee
- Derivative/hedge agreements
- Non-performing loans (NPLs)
- Trading in receivables
- Securitisation
- Repo transactions
- Synthetic securitisations
- Commodities
- Stock lending
- Finance Leases
- Non-finance lease payments
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For more information on this topic please contact James Somerville (Partner), Darragh Noone (Senior Associate) or any member of A&L Goodbody's Tax team.
Date published: 05 August 2022