Entiguan Sports secured a long-term loan for €550,000 in the current fiscal year. Interest is charged at 13.5 percent per annum and is payable at the end of each fiscal year

Why interest rate tax base liability is 0? I don’t understand the explanation from CFA book: the interest paid is included as an expense in the calculation of taxable income as well as accounting income. Therefore, the tax base and carrying amount is €0.

An interest expense when accrued has a corresponding liability on the balance sheet. That it its carrying amount. If this interest expense is paid rather than accrued, then it does not appear on the balance sheet. The carrying amount is zero.

As it is not a balance sheet item, the tax base is zero.
CFA Reading states: “the tax base of an asset or liability is its amount for tax purposes”.

Thank you so much!