Deduct interest

When it is linked to your freelance activity, interest is deductible.

That said, there are 2 exceptions:

1 / excessive interest: for self-employed persons interest paid on advances by entrepreneurs, shareholders, their spouses or underage children is rejected (i) insofar as they exceed the market interest rate, or (ii) because the 1/1 ratio is exceeded.

The 1/1 ratio means that the interest-bearing loan cannot exceed the sum of:

• taxable reserves at the start of the taxable period;

• paid-in capital at the end of the tax period.

2 / Thin Cap: For companies, the credit on loans that exceed the debt or equity ratio of 1/5 is rejected if this surplus exceeds the total amount of the loans by the following amounts times 5:

• taxable reserves at the start of the taxable period;

• the paid-in capital at the end of this period.

Finally, no VAT is charged on interest, so it does not count.