According to recent reports, the Slovakian Ministry of Finance is currently drafting amending legislation to reinstate thin capitalization rules. Previous thin capitalization rules were repealed in 2004.
Under the rules, interest payments on debt held by foreign related parties exceeding a 4:1 or 6:1 debt-to-equity ratio will not be deductible. When the debt is held by a foreign related bank or insurance company the ratios are 6:1 or 10:1. The rules do not apply for interest expenses capita…