The Ministry of Finance has published its annual market interest rate for related party borrowings 2020. The interest rate amounts to 3.42 % p.a.
This interest rate is both the lowest and the highest tax-deductible interest rate that can be charged on loans between domestic and foreign related parties. To clarify further:
Foreign related parties
Domestic related parties
The above market interest rate rules also apply on loans between domestic related parties when one of the parties is in a tax favourable position; specifically, when:
New penalty interest rate which the Tax Authority will charge in the period from 1st January 2020 to 30th June 2020 amounts to 6.11% p.a.