On 27 December 2016 the Luxembourg Tax Authorities (Administration des contributions directes) issued Circular Letter L.I.R. – N° 56/1 – 56bis/1 (the “New Circular Letter”) on the tax treatment of companies engaged in intra-group financing transactions.

The New Circular Letter replaces the previous circular letters LIR N° 164/2 and 164/2bis dated 28 January and 8 April 2011 in order to render the Luxembourg transfer pricing rules compliant with the revised Chapter I Section D of the OECD Transfer Pricing Guidelines.

The main amendments may be summarised as follows:

• replacement of the lump sum determination of the equity at risk of 1% capped at EUR 2 million on a case-by-case analysis;

• enhancement of the content of the transfer pricing reports;

• amendments to the minimum substance requirements;

• simplification measure for intra-group financing companies acting as intermediaries; and

• amendments to the list of information to be provided for advance pricing arrangements.

> Click on the link below to read the full details of the New Circular Letter.

Contacts

Alain Goebel

Alain Goebel is a Partner in the Tax Law practice of Arendt & Medernach where he advises an international clientele on the tax and transfer pricing aspects of Luxembourg and cross border transactions, in particular corporate reorganisations, acquisitions and financing structures. He has been a member of the Luxembourg Bar since 2002. He is a member of ALFI, LPEA, IFA and AIJA. He acted as President of YIN from 2013-2016 and as Luxembourg National Representative for AIJA from 2012-2015. He was a lecturer in business taxation at the University of Luxembourg from 2009-2016 and is a regular speaker at tax seminars. He has published several papers on tax law, including national reports for IFA an...

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