Luxembourg Parliament adopts the law implementing ATAD

Today, the Luxembourg Parliament adopted Bill No. 7318 (the “Law”) implementing into domestic law the Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market (so called “ATAD”).

The Law will be applicable in financial years starting on or after 1 January 2019 except for the provisions regarding exit taxation which will apply as from 1 January 2020.

In substance, the Law remains unchanged since its submission to Parliament. Amendments are essentially of a linguistic/formal nature in order to stick to the ATAD wording. For a detailed analysis of the provisions to be introduced by the Law, please see our article of 10 July 2018.

It is expected that further clarifications on the application of the Law will be made at a later stage either by the Luxembourg tax authorities or by amending laws. In particular, according to a recent public statement by the Luxembourg Minister of Finance, the Luxembourg Government should amend the Law with an effective date of 1 January 2019 to allow taxpayers in a tax unity to apply the interest limitation rule on a consolidated basis.

For any questions please contact Elisabeth Adam or Aurélie Budzin-Dang.