Tom Maguire: What a tangled web we weave when we take on EU tax law before simplifying our own

A new European directive aims to redress the imbalance in debt/equity investing, but here in Ireland, achieving a tax deduction for interest on debt financing is already galactically complex

A hill to climb: the tax picture on debt/equity in Ireland needs simplifying before we take on any more changes. Picture: Getty

Cash, sourced from either debt or equity, is the lifeblood of business.

In general, tax deductions are given where a company finances its activities by debt and not equity. Last month, however, the European Commission released a draft for a new directive to address this tax-induced debt/equity bias.

The proposal includes both a debt/equity bias reduction allowance (Debra) in the form of a notional interest deduction on equity, and a general limitation on the tax ...