[Mateusz Młynarczyk]

Adoption of the EU directive laying down rules against tax avoidance practices that directly affect the functioning of the internal market (also known as the ATAD directive), could have an impact on M&A transactions.
The provisions of the directive introduce primarily:
– interest limitation rule
– exit tax
Above rules implemented to the tax law of each EU country should be the subject to the tax due diligence processes however limitation of interest value treated as tax deductible cost could affect the NPV calculations as part of the discount rate calculated in accordance with the WACC (tax shield, tax paradox).
The interest limit is calculated as 30% of the tax EBITDA but deductible amount could not be higher than 3 000 000 euro (interpretation of this limit is a subject of dispute between the taxpayers and tax authorities in Poland).

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