New guidance rules for intragroup financing activities: what's important?

On 27 December 2016, the director of the Luxembourg direct tax administration (administration des contributions directes) issued a new circular n° 56/1 – 56bis/1 on the tax treatment of companies performing intragroup financing activities (the "New Circular"). It will replace the two existing circulars n° 164/2 of 28 January 2011 and n° 164/2bis of 8 April 2011 (collectively, the "Initial Circular"). The New Circular is to be read in combination with article 56 of the Luxembourg income tax law ("LITL"), applying the arm's length principle on transactions between related parties ("Controlled Transactions"), and new article 56bis LITL1, on transfer pricing requirements.

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