Taxand Luxembourg explains the new guidelines for intra-group financing activities released by Luxembourg tax authorities.
On 27 December 2016, the Luxembourg tax authorities released a new circular (the Circular) on the tax treatment of intra-group financing activities. The Circular follows the introduction of the new article 56bis of the Income Tax Law (ITL) on the application of the arm’s length principle.
The Circular provides guidance on the practical application of these principles to intra-group financing activities, ensuring consistency with recent Luxembourg legislative developments and all international transfer pricing standards.
The Circular cancels and replaces circular 164/2 of 28 January 2011 and circular 164/2bis of 8 April 2011 and becomes applicable as from 1 January 2017.
Discover more: New guidelines for intra-group financing activities
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Since the new rules will become applicable from 2017, companies performing financing and on-lending activities in Luxembourg should review their transfer pricing policy and related transfer pricing documentation to make sure that these are in line with the new requirements.
