Anti-base erosion profit shifting (BEPS) measures

Interest Limitation Rule (ILR)

The Interest Limitation Rule (ILR) is intended to limit base erosion using excessive interest deductions. It limits the maximum net interest deduction to 30% of Earnings Before Interest, Taxes, Depreciation, Amortization (EBITDA). Any interest above that amount is not deductible in the current year. Instead, interest deductibility is deferred until such time as there is sufficient interest capacity to allow deduction.

The ILR applies to accounting periods commencing on, or after, 1 January 2022.

The ILR applies to all corporate taxpayers. However, there are certain exemptions to the ILR. These exemptions are:

  • companies with net interest expense of €3 million or lower
  • standalone companies with no associates, group companies or permanent establishments outside Ireland
  • interest on borrowings for Long-Term Public Infrastructure Projects are not subject to the ILR
  • and 
  • interest on legacy debt (terms agreed on, or before, 17 June 2016).

A company may be a member of a group. The debt position of that group is considered when assessing whether excessive interest deductions are taken.

A group of Irish companies may be treated as a single taxpayer. This is only for the purposes of this restriction and under certain conditions.

For further information, please refer to Tax and Duty Manual Part 35D-01-01 Guidance on Interest Limitation.


Part 35D of the Taxes Consolidations Act 1997, implements the Anti-Tax-Avoidance Directives (ATAD) by introducing interest limitation rules. Specifically, Council Directive (EU) 2016/1164 (ATAD) as amended by (EU) 2017/952 of 29 May 2017 (ATAD2).

Next: Pillar Two