4.07% market interest rate also applies to credit interest on current accounts in 2022

This so-called credit interest is exclusively deductible for the company in question, to the extent that:

• the interest rate applied does not exceed the market interest rate;

and

• the amount borrowed does not exceed the sum of the taxed reserves at the commencement of the financial year and the paid-up capital at the close of the financial year.

If the interest rate or loan amount exceeds the above, the company runs the risk of having a portion of this interest reclassified as a (non-deductible) dividend.

Which market interest rate applies?

A legal definition of this market-based interest rate was provided on 1 January, 2020. For variable-rate non-mortgage loans (as is the case with a current account credit balance), the market interest rate is based on the MFI interest rate for the November of the previous calendar year, plus 2.5%.

The November 2021 MFI interest rate was 1.57%. This means that, after applying the 2.5% increase, the market interest rate for interest relating to 2022 is 4.07%. In other words: exactly the same rate as last year!

For the sake of completeness, we would like to point out that the maximum statutory market interest rate must also be applied in the event that a company grants a loan to another company.

Conversion to a fixed-rate loan

Please note that this statutory market interest rate applies to variable-rate non-mortgage loans.

If, on the other hand, you use a fixed-term loan, you can consequently apply a market-aligned interest rate for your specific circumstances. In such cases, you may therefore deviate from the (maximum) interest rate of 4.07%.

Do you have additional questions pertaining to interest rates for taxation purposes? Or would you like an analysis of your specific circumstances? Then please do not hesitate to contact one of our experts using the form below.