Market interest rate on loans between related parties for year 2023 and penalty interest

In Official Gazette No. 151/22 Ministry of Finance published the 2023 annual market interest rate on loans between related parties, which amounts to 2.4%.

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 foreign related party is not charged or it is charged at the lower interest rate than prescribed, 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, corporate profit tax base must be increased in the Corporate Profit Tax return.

This interest rate also applies on loans between domestic related parties, if one of the parties is in the tax favourable position, i.e. if:

• pays corporate profit tax at the rate which is lower than the prescribed corporate profit tax rate or does not pay tax at all (i.e. uses tax relieves); or
• 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 2023 amounts to 5.50% p.a.