The Ministry of Finance of the Slovak Republic has published preliminary information on the prepared amendment to Act No. 595/2003 Coll. on income tax, as amended (the “ITA”) in the area of the tax deductibility of interest costs, by implementing EU Council Directive ATAD 1, the Anti-Tax Avoidance Directive.
The ITA currently limits only the costs of received loans and credit from related parties. According to the preliminary information on the amendment to the ITA, the rules for the tax deductibility of excess interest costs (i.e. interest costs exceeding the interest income) are to be modified. The downside, however, is that this limitation of interest cost should now apply to all borrowings, i.e. even if they are received from third parties (e.g. banks) and not only from related parties. The basis for limiting the amount of excess interest costs should be the tax base increased by tax depreciation and exceeding (tax) costs for received loans and credit.
As the concept of the Ministry of Finance of the Slovak Republic and the wording of the amendment are not currently known, we will inform you about further developments.
