Thin-Cap Rules

Tighter Limits on U.S. Interest Deductibility Make U.S. an Outlier and Increase Pain of Rising Interest Rates

While there is disagreement about the amount of interest that should be deductible, it’s clear that the limit based on EBIT makes the U.S. an outlier compared to other countries across the OECD while raising the cost of new investment.

International Tax Rule

Comparing Europe’s Tax Systems: International Tax Rules

International tax rules define how income earned abroad and by foreign entities are taxed domestically, making them an important element of a country’s tax code.

Thin-Cap Rules in Europe

To discourage a certain form of international debt shifting, many countries have implemented so-called thin-capitalization rules (thin-cap rules), which limit the amount of interest a multinational business can deduct for tax purposes.

The Economics Behind Thin-Cap Rules

Thin-Cap Rules in Europe