Volume 47 (2019) / Issue 5

G.F. Boulogne, 'Debt Push-Downs in Times of BEPS Action 4 and the ATAD' (2019) 47 Intertax, Issue 5, pp. 444–453


Debt push-downs are a common feature of mergers & acquisitions transactions. This article will address a key concern raised by debt-push downs: the decrease in the target company’s taxable income (through the interest deduction) is often not paired with any increase in taxable income. Given this concern, this article will discuss the Dutch approach of discouraging debt push-downs, whereby a specific measure was abolished on 1 January 2019 in light of the implementation in Dutch law of the earnings stripping measure contained in the Anti-Tax Avoidance Directive (ATAD); a rule that reflects the BEPS Action 4 recommendations. This move, from specific to generic, raises more general questions: how do debt push-downs fit within the policy notions underlying BEPS Action 4? Does the new earnings-based approach take away the concerns raised by them? Does the ATAD require Member States to take action against debt push-downs? The article concludes with outlook on the ability of multinational corporations to push down debt in current times.

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ISSN: 0165-2826
ID: TAXI2019045