Debt Equity Bias Reduction Allowance

Early May 2022, the European Commission published a proposal for a debt-equity bias reduction allowance (DEBRA) to address the debt-equity bias in taxation. From a German industry point of view, however, introducing an allowance for incremental equity and disallowing a share of interest payment for all debt at the same time cannot be considered as a balanced approach. We therefore call on the European Commission to embed the DEBRA initiative in a broader concept which strives for an administrative simplification of European tax law.