Market interest rate for related party loans for the year 2021

The Ministry of Finance has published the market interest rate for related party loans for the year 2021. The market interest rate is 3.00 % p.a.

This interest rate is the lowest and the highest tax-deductible interest rate that can be charged on loans between domestic and foreign related parties:

• if interest on loans provided to a foreign related party is not charged or is charged at a lower interest rate than prescribed the corporate profit tax base must be increased for the difference of non-charged interest or interest charged at the lower interest rate in the Corporate Profit Tax return.
• for the excessive loan interest rate charged by the foreign related party the corporate profit tax base must be increased in the Corporate Profit Tax return.

This interest rate also applies on loans between domestic parties, if one of the parties is in a tax favourable position when:

1. corporate profit tax is paid at a lower rate than prescribed for corporate profit tax or does not pay tax at all (i.e. uses tax reliefs).
2. in the respective tax period utilises tax losses carried forward from previous years.

Penalty interest

Penalty interest on taxes and social security contributions for the period from 1st January to 30th June 2021 amounts to 5.75 % p.a.