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Transfer Pricing Rules For Intra-Group Financing Transactions


On 8 April 2011 the Luxembourg direct tax authorities issued Circular L.I.R. 164/2 bis (Circular Bis), which clarifies the conditions for application of a previous circular of 28 January 2011 (the Initial Circular) relating to the tax treatment of intra-group financing transactions.

The purpose of the Initial Circular was to confirm the application of the OECD transfer pricing guidelines to intra-group financing, and to formalise the procedure for applying for an APA. Taxand Luxembourg looks at the impact of the Circular Bis.

From 1 January 2012, tax authorities will no longer be bound by APAs obtained before 28 January 2011 in relation to intra-group financing transactions which would otherwise fall within the scope of the Initial Circular. For each individual intra-group financing transaction, the actual impact of the Circular Bis will depend on the particular circumstances. The steps to be taken as a result of the Circular Bis are as follows:

  • First scenario: file and progress in line with the expired APA
  • Second scenario: apply for a new APA

Taxand's Take

Multinationals who operate within this jurisdiction should be aware of these changes to APAs to ensure they are compliant.

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Your Taxand contact for further queries is:
Keith O'Donnell
T. +352 (26) 940 257

Taxand's Take Author