After it earlier provided the possibility to provide input on a roadmap, on July 1, 2021 the European Commission opened a public consultation on a debt-equity bias reduction allowance (DEBRA). Interested parties can give their input until October 7, 2021 (midnight Brussels time). The consultation is shaped in the form of a questionnaire via which interested parties can provide their input.


Target audience

The initiative to introduce an allowance system for equity financing to mitigate the debt-equity bias induced by taxation is relevant for stakeholder from the private sector as well as from the public sector.


Concerning the private sector, a broad range of stakeholders are invited to provide their views on the matter: businesses (including SMEs), trade-, business- or professional associations, tax professionals. Contributions from academic institutions, research institutes, non-governmental organizations and citizens are equally welcome.


Member States’ public authorities (ministries of finance and tax authorities) will be invited to provide their views on this initiative.


According to the European Commission given the technical nature of the initiative, a few questions are more directed to stakeholders with expert knowledge but the public consultation questionnaire is open to all stakeholders.


Why the European Commission is consulting

According to the Commission the objective of the consultation is to collect views and opinions from the public (citizens, NGOs, academics, associations, etc.), businesses and Member State administrations on the perception of the tax induced debt-equity bias and the possible solutions to tackle it. To this aim, the consultation will gather information and knowledge on the existence and magnitude of indebtedness due to the tax debt bias and potential impacts of the policy options. Furthermore, it aims to gather views on appropriate anti-abuse rules linked to the measure.


The information gathered through the consultation will comprise the definition of equity, the reasons for indebtedness of EU companies, possible solutions to address the tax induced debt-equity bias, the appropriate level of the notional interest rate for an allowance on equity, or the need for a higher rate for SMEs. Concerning the anti-abuse framework, the input gathered through the consultation should provide the European Commission with information on stakeholders’ views on an effective, proportionate and dissuasive framework of anti-abuse rules linked to the measure.


Those who would like to give input on questionnaire of the European Commission can find that questionnaire here. Please be aware that before being able to provide input you have to register with the European Commission.



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