The ATAD general anti-abuse rule in Luxembourg

#Auteur: Michiel¤ BOEREN

#Qualités: Partner, Tiberghien Luxembourg

#Auteur: Maxime¤ GROSJEAN

#Qualités: Senior Associate, Tiberghien Luxembourg

#Auteur: Maja¤ VULEVIC

#Qualités: Associate, Tiberghien Luxembourg

The article discusses the implementation of the ATAD general anti-abuse rule into Luxembourg law, reflecting also on the previous Luxembourg anti-abuse regime and its relevance and potential impact in the light of the application of the ATAD general anti-abuse rule.

Introduction

1. Two anti-tax avoidance directives, respectively Council Directive (EU) 2016/1164 of 12 July 2016 (“ATAD 1”) and Council Directive (EU) 2017/952 of 29 May 2017 (“ATAD 2”), designed to tackle tax avoidance within the internal market, have significantly impacted the European tax landscape.

ATAD 1 was introduced into Luxembourg law by the Law dated 21 December 2018 and most provisions have been applicable since 1 January 2019 (i.e. those relating to interest limitation, controlled foreign company, hybrid instruments within the EU and general anti-avoidance rule), with the exception of the rules pertaining to exit taxation, which were made applicable only as from 1 January 2020.

On 19 December 2019, the “ATAD 2” was implemented in Luxembourg with the intention to extend the scope of anti-hybrid mismatches rules to third countrie...