Attention all Luxembourg tax professionals! We have entered the next chapter in the discussion on the exclusion of Securitisation Vehicles covered by the Anti-Tax Avoidance Directive (ATAD1). The LuxCMA has just released a statement addressing the recent news of the European Commission referring #Luxembourg to the Court of Justice of the European Union for failing to correctly transpose ATAD.

On 11 May 2022, the European Commission published a Directive proposal to tackle the tax bias in favor of debt funding. The proposal includes both a notional deduction on growth in equity and an additional limitation on interest deduction for corporate income tax (CIT) purposes – the 𝗗𝗘𝗕𝗥𝗔 𝗽𝗿𝗼𝗽𝗼𝘀𝗮𝗹. The DEBRA proposal, once adopted by the Council, would have to be implemented into Member States’ national law by 31 December 2023 and should come into effect as of 1 January 2024.

Cross-border investment and simplified taxation are a priority for the EU. Despite the measures taken to remove tax barriers to cross-border investment, obstacles remain in the EU. This initiative aims to introduce a common EU-wide system for withholding tax on dividend or interest payments. It will include a system for tax authorities to exchange information and cooperate with each other.

UPDATE OF THE 26/05/20 PAPER l According to the December infringement package published by the European Commission, the latter sent a reasoned opinion to Luxembourg asking it to correctly transpose the interest limitation rule of the Anti-Tax Avoidance Directive (Article 4 of the Council Directive (EU) 2016/1164). Under current Luxembourg law, securitisation companies covered by Regulation (EU) 2017/2042 of 12 December 2017 (EU Securitisation Regulation) are excluded from the scope of the interest limitation rules. The reasoned opinion follows a formal notice sent to Luxembourg on 14 May 2020.

Luxembourg remains one of the main securitisation centres in Europe. Its attractive and flexible legal and tax framework is adapted to the needs of investors and SVs, particularly with regard to VAT exemptions. Our #LuxCMA VAT Task Force takes stock of the situation and provides useful insights for CLOs and CDOs.

Our technical position paper, which was accessible to our LuxCMA members only, is now available to everyone! Congratulations again to our Direct Tax Working Group (previously #Securitisation & #ATAD Task Force) for the release on 26/10/2020 of the impressive technical position paper on #deductibility of payments by securitization companies financed by debt.

On 14 May 2020, the European Commission announced that it decided to send a letter of formal notice to Luxembourg asking it to correctly transpose the interest limitation rule of the Anti-Tax Avoidance Directive (Article 4 of the Council Directive (EU) 2016/1164). Under current Luxembourg law, securitization companies covered by Regulation (EU) 2017/2042 of 12 December 2017 (EU Securitization Regulation) are excluded from the scope of the interest limitation rules. If Luxembourg does not act within the next four months, the European Commission may send a reasoned opinion to the Luxembourg authorities.