General Trends – EU & international tax

2022 was another year rich in tax developments in Luxembourg and Europe. In an exceptional economic and geopolitical context, the European institutions continued to launch and implement international tax initiatives.

Luxembourg has continued to play an important role in reaffirming its support for international initiatives aimed at fairer and more transparent taxation, while at the same time launching domestic projects to improve the competitiveness of Luxembourg's economy.

Our experts Eric Fort, Tax Partner, and Philipp Jost, Tax Counsel, will provide an overview of past and upcoming initiatives with a definite impact on corporate taxpayers with international operations.

Transfer Pricing: takeaways from recent case law

Transfer pricing audits and litigation have increased significantly recently. Among others, two landmark decisions were issued in 2022 at domestic and European level.

Our transfer pricing experts Alain Goebel, Tax Partner, and Alexandre Maschiella, Senior Associate, will provide you with in-depth analysis and takeaways regarding the recent Luxembourg administrative tribunal decision on the recharacterisation of an interest-free loan as equity, and the decision of the Court of Justice of the EU in the well-known case of alleged State aid against FIAT.

Recent tax developments impacting the asset management industry in Luxembourg

The international anti-abuse tax initiative (known as BEPS), initially aimed at counteracting aggressive tax strategies used by multinationals, has hit the fund industry hard. The fund industry has had to adapt to the new European rules implementing some of the BEPS measures, to avoid imposing an unjustified tax cost on investors which would be contrary to the tax neutrality principle applicable to investment funds.

Aware of these imperatives, the Luxembourg government has, as part of the 2023 budget, proposed to clarify the practical impact of reverse hybrid rules for certain types of investors. However, some upcoming tax measures may again force the fund industry to adapt. These include the new directive introducing minimum taxation rules (the “Pillar II Directive”), recently agreed by the EU Member States. The difficulty in applying these rules will come from their scope, which is intrinsically linked to accounting rules, IFRS in particular.

Our experts Jan Neugebauer, Tax Partner, Yves Philippart de Foy, Tax Counsel, and Yvan Stempnierwsky, Financial Reporting & Accounting Standards expert, will share their insights on these new measures that may impact investment funds.

Real estate fund structuring: market trend update

Real estate investment structures have not escaped the onslaught of new tax rules resulting in particular from local implementation of EU anti-tax avoidance directives, modification of tax treaties following implementation of the OECD multilateral instrument (“MLI”), but above all, various anti-abuse rules implemented in investment countries and their application by the relevant courts. Investors and asset managers have been forced to adapt to these changes. There is also a clear trend towards simplification of Luxembourg investment fund structures, impacting in particular the choice of Luxembourg transparent or opaque vehicles, and potential regulated regimes suitable to promoters’ and investors’ requirements.

Our experts Vincent Mahler, Tax Partner, and Alexandra Clouté, Tax Counsel, will guide participants through the new trends impacting Luxembourg real estate investment fund structures, with a focus on investment countries such as France, Germany,  Italy, Portugal, Spain and the UK.

VAT trends: what to keep in mind for 2023

VAT continues to evolve and to bring complexities for taxpayers. Recent Luxembourg and EU case law, plus several proposals at EU Commission level show that VAT is far from simplification.

Our experts, Bruno Gasparotto, Tax Principal, Sophie Weyten, Tax Counsel, and Claire Schmitt, Tax Counsel will share their insights on those developments that may affect taxpayers with international operations.