What changed between the plenary report and the adopted text

Changed:Recital 3: (3) In order to remove possible tax related distortions among Member States, it is necessary to lay down a common framework of rules to address the tax related debt-equity bias across the Union in a coordinated manner, while respecting in full the Union’s institutional framework on tax matters as established by the Treaties. Such rules should ensure that equity and debt financing are treated in a similar way for tax purposes across the single market. At the same time, given the extensive tax deductibility of debt and the fact that creating an allowance on increases in equity could have a direct impact on public revenues, a common Union legislative framework should be sustainable also in the short term for Member States’ budgets. Such framework should therefore include rules, on the one hand, for the tax deductibility of equity financing costs and, on the other, for limiting the tax deductibility of debt financing costs. This Directive should aimaims to strike a better balance between the different challenges related to the sustainability of Member States’ public finances in the short term and, in doing so, should avoid Member States incurring substantial losses in revenues and aim to improve companies’ financial stability.

Changed:Recital 3 a (new): (3a) In order to further develop the capital markets union, this Directive should aimaims to diversify funding sources for Union companies, especially for SMEs. Therefore, it should avoid creating new costs and barriers in respect of access to financing for those companies that cannot yet easily access capital markets. Limiting the deductibility of those companies’ interest costs could hamper investment across the Union, hence the interest deduction should not be limited for SMEs and medium-sized groups.

Changed:Article 4 – paragraph 1 – subparagraph 1: An allowance on equity shall be deductible, for: / – 10 consecutive tax periods, from the taxable base of an SME or medium-sized group for corporate income tax purposes up to 30% of the taxpayer’s earnings before interest, tax, depreciation and amortisation (“EBITDA”); / – 7 consecutive tax periods, from the taxable base of any large undertaking or large group for corporate income tax purposes up to 30% of the taxpayer's earnings before interest, tax, depreciation and amortisation (“EBITDA”).EBITDA.

Changed:Article 5 – paragraph 3 a (new): 3a. Member States shall ensure that the measures they adopt to transpose this Article into national law,law comply with the guidance provided by the Code of Conduct Group (business taxation) on notional interest deduction regimes.