Both the European Union (EU) Directive implementing the OECD’s Pillar Two and the proposal for a debt-equity bias reduction allowance (DEBRA) feature rules that target and limit interest deduction as the need for these still exists. However, in case C-484/19 Lexel from 2021, the Court of Justice of the European Union (CJEU) struck down the Swedish targeted interest deduction legislation of 2013 applying to loans between associated companies. The Court considered the legislation to constitute an unjustifiable restriction of the freedom of establishment. It essentially stated that only wholly artificial arrangements could be the object of the targeted interest deduction rules while, at the same time, concluding that transactions carried out at arm’s length cannot be considered artificial or fictitious arrangements. After Lexel, the question is whether targeted interest deduction rules that are drafted with the objective of combating tax base erosion have any future, or must Member States only rely on the application of anti-abuse rules or targeted interest deduction rules mandated by secondary EU law?