On 9 January 2015, the Luxembourg tax authorities published Tax Circular L.I.R. n° 14/4 (the "Circular") on the Luxembourg tax treatment of income realised by Luxembourg law limited partnerships set up as société en commandite simple ("SCS") or as société en commandite spéciale ("SCSp").
As per 1 January 2015, Luxembourg codified (i) the Luxembourg advance tax ruling and advance pricing agreement (ATR/APA) practice and (ii) the arm's length principle (prior coverage: Luxembourg Budget 2015: corporate tax measures and Year End Tax Bulletin 2014). In addition, procedural rules in relation to the ATR/APA practice were laid down in a new Grand-Ducal decree dated 23 December 2014 (the Decree), also effective as per 1 January 2015.
In the framework of the Lisbon strategy for growth and employment in the EU, the Grand-Duchy of Luxembourg added Article 50bis to the Income Tax Act 1967 ("Loi concernant l'impôt sur le revenu du 4 décembre 1967" or "L.I.R.") at the end of 2007.
On the basis of this regime (the "50bis Regime"), Luxembourg undertakings and Luxembourg branches of foreign companies can benefit from an exemption of 80% on revenues (royalty fees...) derived from patent, trademark, design and domain name rights as well as from copyright on software, to the extent that such rights have been established or acquired after 31 December 2007. The exemption brings the effective tax rate for such revenues to approximately 5.85%.
Automatic exchange of information ("AEOI") has been a hot topic on the international scene for more than a decade now. Besides the FATCA turmoil, the following EU directives currently provide for an AEOI for certain items of income.
