Luxembourg tax guidance addresses intragroup financing, updates ruling procedure

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The Luxembourg government on December 27 published new tax guidance for intragroup financing transactions.

The guidance, LIR. n° 56/1– 56 bis/1, applicable from January 1, sets out new rules to be followed by intragroup financing companies in conducing a transfer pricing analysis and in initiating a request for an advance ruling from Luxembourg tax authorities. The guidance replaces 2011 circulars LIR n° 164/2 and 164/2bis on the topic.

The guidance follows the adoption of new Article 56bis LIR, added by the Budget Law of December 23, 2016, and effective for 2017, which implements transfer pricing comparability analysis into Luxembourg’s corporate tax system.

The guidance states that any individual tax ruling made on the basis of tax rules before the coming into force new Article 56bis LIR are considered as non-binding on the Luxembourg tax authorities after January 1 for tax years after 2016.

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