Update of the Luxembourg Transfer Pricing Circular
On 8 April 2011, the Luxembourg Tax Authorities issued a second transfer pricing circular (Circulaire du directeur des contributions L.I.R. n°164/2bis.pdf, 'the Second Circular') clarifying the status of Luxembourg entities carrying out intra-group financing activities that obtained advance pricing agreements ('APA') with the Luxembourg Tax Authorities before the publication of the first transfer pricing Circular (L.I.R. n° 164/2) of 28 January 2011 ('the First Circular').
The First Circular, relating to the tax treatment of entities carrying out intra-group financing activities, provides the guidelines to be followed by the Tax Authorities when dealing with APA requests made by Luxembourg intra-group financing companies.
The Second Circular indicates that the binding effect of APAs obtained by Luxembourg intra-group companies with the Luxembourg direct Tax Authorities prior to 28 January 2011, will terminate on 31 December 2011.
The Tax Authorities will act in accordance with Circular LIR n° 164/2 of 28 January 2011 when dealing with companies wishing to obtain new APA's.
Accordingly, Luxembourg is paving the way for full compliance with OECD and EU standards, which is a normal development in the country, amid the current transfer pricing trend of intra-group transactions in all of Luxembourg's developed partners.
KPMG Tax Luxembourg has a dedicated team to assist you in all transfer pricing matters. Please visit our dedicated webpages.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.