On 11 May 2022, the European Commission published a Directive proposal to tackle the tax bias in favor of debt funding. The proposal includes both a notional deduction on growth in equity and an additional limitation on interest deduction for corporate income tax (CIT) purposes – the 𝗗𝗘𝗕𝗥𝗔 𝗽𝗿𝗼𝗽𝗼𝘀𝗮𝗹.

The DEBRA proposal, once adopted by the Council, would have to be implemented into Member States’ national law by 31 December 2023 and should come into effect as of 1 January 2024.