bpfi symbol in 3d

BPFI Response to the Department of Finance Consultation on ATAD Implementation – Article 4 Interest Limitation

On 4th March 2021, Banking and Payments Federation responded to the Department of Finance Feedback Statement of 23rd December 2020 in response to the public consultation undertaken on the implementation of the Anti-Tax Avoidance Directive (ATAD).   

The purpose of the Feedback Statement was to set out some potential options for dealing with the technical aspects of some of the Interest Limitation Rules (ILR) which will be implemented in Finance Bill 2021, to come into effect from 1st January 2022.

Article 4 of ATAD requires Member States to introduce a fixed ratio rule that links a company’s allowable net interest deductions (i.e.deductible interest expenses in excess of taxable interest income) directly to its level of economic activity, based on taxable earnings before deducting net interest expense, depreciation and amortisation (EBITDA).

The ATAD ILR, which is based on the recommended approach outlined in the OECD BEPS Action 4 2015 Final Report, is intended to limit base erosion through the use of interest expenses to create excessive interest deductions or exempt or deferred income.

Due to the complexity of the ATAD ILR this Feedback Statement contains specific consultation questions on a range of technical and policy questions.

For further information on BPFIs position please see the final response here.

If you have any questions, you can contact Marian McCarville, Head of Business Banking & Taxation, BPFI by email at