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    Corporate Tax · Transaction Structuring§ 4h EStG · § 8a KStG · Growth Opportunities Act

    Corporate Tax & Interest Barrier (§ 4h EStG) Terminal

    Model corporate interest deductibility caps in debt-funded LBOs and groups: 3.0M EUR safe harbor, 30% tax EBITDA cap, interest carryforward, and equity comparison escape clause.

    3M € safe harbor100% deductible up to 3M
    Tax EBITDA30% deduction capacity
    Escape clauseEquity ratio test < 2% delta
    Interest carryforwardNo time limit

    Income & Interest Positions

    Tax EBITDA
    €9,000,000
    30% Cap: €2,700,000
    Non-Deductible Overhang
    €0
    Tax Impact: €0

    Statutory Safe Harbors & Limits

    § 4h EStG
    Safe Harbor 3.0M €
    Exceeded
    Net interest: €4,500,000
    Escape Clause
    Applies (100% deductible)
    Equity ratio test PASS

    Statutory Tax Rationale

    When does the 3.0M EUR Safe Harbor apply?

    If net interest expense (gross interest expense minus gross interest income) is less than 3,000,000 EUR in the tax period, the interest barrier does not apply and all interest is fully deductible.

    How does the Escape Clause work?

    For group companies, interest is fully deductible if the operating entity equity ratio is within 2 percentage points of the group equity ratio, provided tainted shareholder debt does not exceed 10%.

    Structuring a leveraged buyout or mitigating corporate tax interest overhangs?Request Tax Structuring Audit