Taxes Consolidation Act 1997 section 835AY

Interpretation (Part 35D)

Section 835AY defines the terms used throughout Part 35D, which introduces an interest limitation rule capping the tax deduction a company or group may claim for interest and economically equivalent financing costs.

• The interest limitation rule restricts deductible interest and equivalent financing costs to the allowable amount, calculated as 30 per cent of EBITDA (the EBITDA limit), with a de minimis threshold of €3 million per 12-month accounting period.
• Interest equivalent includes not only interest but also discounts on securities, the finance element of finance and non-finance lease payments, amounts under hedging arrangements connected with raising finance, guarantee and arrangement fees, and related foreign exchange gains and losses.
• The rule does not apply to the financing of qualifying long-term infrastructure projects involving large scale assets, which include specified energy, transport, environmental, healthcare and housing developments approved under various planning enactments.
• Finance Act 2025 expands the definition of large scale asset to include electricity transmission, strategic gas and strategic infrastructure developments, and large-scale residential developments, approved under the Planning and Development Act 2024.