NID Rate

Author:Ms Caroline Kempeneers and Geert De Neef
Profession:LYDIAN
 
FREE EXCERPT

The so called "notional interest deduction" (NID) was introduced a couple of years ago to encourage companies to finance themselves with equity instead of debts by allowing companies a "fictional" or "notional" interest deduction on their equity.

The NID equals a certain percentage of the company's (adjusted) equity. The percentage is determined for each fiscal year and is equal to the annual average of the monthly published interest rates for 10-year linear Belgian government bonds («OLOs») over the year taken two years before the fiscal year concerned (e.g. the average of the interest rates of 2009 for fiscal year 2011).

The notional interest rate is not allowed to deviate...

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