LexGo

The Arm’s Length Principle And Profit Participating Loans: First Decision By Luxembourg Courts - Tax Case Study
24/09/2021

Our tax litigation team recently had the opportunity to assist a taxpayer in an appeal for the reversal of a decision issued by the Luxembourg tax administration (“LTA”) that considered that the interest on a profit participating loan (“PPL”) was excessive, and that requalified a portion thereof into a hidden profit distribution subject to a 15% withholding tax.

This case is of particular interest given that it is the first judgement analysing the compliance of the variable interest of a PPL with the arm’s length principle. The Administrative Tribunal of Luxembourg (“Tribunal”)[1] confirms that the interest rate of a PPL may be justified by a comparison with the arm’s length interest accrued during the same period on a similar fixed interest loan. It also acknowledges that any value in the interest rate range determined by the economic analysis satisfies the arm’s length principle. Finally, the decision recalls the binding character of an advance tax confirmation (“ATC”). This decision is final.

[1] Administrative Tribunal of Luxembourg, 4th chamber, case n° 43264 dated 13 July 2021.

Click here to read the full Tax case study

Voir aussi : Arendt

[+ http://www.arendt.com]


Click here to see the ad(s)
Tous les articles Fiscalité directe des entreprises

Derniers articles Fiscalité directe des entreprises

Comparability of Investment Funds – another Finnish referral to the Court of Justice of the Eur...
22/10/2021

Recently, an Advocate General’s opinion (the “Opinion”) on Finnish CJEU case C-342/20 (the “Case&r...

Comparability of Investment Funds – another Finnish referral to the Court of Justice of the European Union – another positive signal Read more

Agreement on Pillar One and Pillar Two global tax reform
12/10/2021

On 8 October 2021, 136 out of 140 members of the OECD/G20 Inclusive Framework officially agreed on certain key parameters ...

Agreement on Pillar One and Pillar Two global tax reform Read more

Property companies holding real estate assets in Germany – state of play on the input VAT deduc...
17/09/2021

The case concerned a Jersey-based company, Titanium Ltd (‘Titanium’), involved in real estate and asset manage...

Read more

Direct taxation - AG Kokott opines on the ‘expected interest’-criterium (État luxembourgeois)
14/09/2021

The French tax authorities made a request for exchange of information to the Luxembourg tax authorities aiming at the...

Direct taxation - AG Kokott opines on the ‘expected interest’-criterium (État luxembourgeois) Read more

LexGO Network