The Department of Finance has commenced work on a review of the taxation and deductibility of interest by businesses in Ireland, through the launch of a Public Consultation on the Tax Treatment of Interest by Minister for Finance, Jack Chambers on 27 September 2024.

The taxation and deductibility of interest is a complex area of Irish legislation, with Minister Jack Chambers stating that the “consultation is timely to ensure Ireland’s tax system remains resilient, supports competitiveness, protects the tax base, and aligns with our international commitments”.  

The consultation looks for stakeholder input for the following;

• identify aspects of the existing interest related tax rules which pose difficulties, and outline those difficulties,  
• identify aspects of existing interest related tax rules which could be simplified, and how these simplifications might be implemented,  
• identify and describe any bona fide commercial scenarios where tax relief for interest expense is not currently available for businesses under existing legislation, where tax relief should be available,
• identify and explain the benefits that would be expected to flow from any new approach to the taxation and deductibility of interest, and  
• identify and explain possible adverse consequences of any proposed changes.

It is acknowledged within the consultation paper that the review of the tax treatment of interest will require a significant body of work to be carried out over a multi-year timeframe.  The consultation period will run to four months, ending on Thursday, 30 January 2025.  

The commencement of the public consultation is a welcome and important step towards the simplification of Irelands Corporate Tax Regime, to continue to enhance Irelands Foreign Direct Investment offering.

Please reach out to any of the RSM Ireland Corporate Tax Team if you would like further insight on the Public Consultation.