What is the OECD-recommended interest limitation rule?

BEPS Action 4 recommends limiting net interest deductions (interest income minus interest expense) to 10–30% of EBITDA. The EU Anti-Tax Avoidance Directive (ATAD) implemented a 30% EBITDA fixed ratio across EU member states, with a de minimis EUR 3 million threshold below which the rule does not apply.

Can disallowed interest be carried forward?

Yes. The OECD recommends that disallowed interest expense should be available for carryforward (and typically carryback in some jurisdictions) to prevent permanent double taxation. Unused interest capacity from prior years can also typically be carried forward to allow deduction when future EBITDA improves.

Thin Capitalization Interest Stripping Limit

Calculate the maximum deductible related-party interest under thin capitalization rules, typically limiting net interest deductions to 30% of EBITDA (OECD BEPS Action 4 recommended fixed ratio).

Use the full interactive calculator below, or

Related Calculators

Transfer Pricing

Finance Long-tail

BEPS CbCR Threshold

Finance Long-tail

Thin Capitalization Interest Stripping Limit

Related Calculators

Frequently Asked Questions

What is the OECD-recommended interest limitation rule?

Can disallowed interest be carried forward?