"The equity interest deduction in a country comparison"

This article examines the deduction of interest on equity (NID) in Liechtenstein, Belgium, Italy and Latvia in the context of the planned third series of corporate tax reforms in Switzerland. NID aims to reduce the tax disadvantage of equity compared to debt capital by recognizing a notional interest rate on equity as a deductible expense. Liechtenstein introduced an NID in 2011 to strengthen its competitiveness, while Belgium, Latvia and Italy have introduced similar regulations. Switzerland is also considering the introduction of a NID to counter international criticism of tax privileges and to promote financing equality. An effective NID would reduce the effective tax rate, but depends on the equity ratio. The article highlights practical challenges and adjustments to the NID regulations in the countries mentioned and discusses possible effects and implementation strategies for Switzerland.

Topics in the publication

• Equity interest deduction (NID)
• Tax measures in various countries
• Corporate tax reform in Switzerland
• Comparison and analysis
• International criticism and pressure
• Tax law adjustments
• Practical problems
• Economic effects