The Notional Interests Deduction and its Impact on the Cost of Capital

Project: Research

Description

Through the legislation of notional interests, the Belgian government aim at reducing the tax discrimination between equity funding and debt. What is the impact of such a legislation on firms' cost of capital? The effective taxation literature - and its key parameter, called the cost of capital - provides us with a useful framework in order to answer these questions.
StatusFinished
Effective start/end date1/01/0530/06/06

Keywords

  • cost of capital
  • tax discrimination
  • effective taxation
  • Notional interests