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Luxembourg Tax Alert 2021-01

Luxembourg Tax Alert 2021-01

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Luxembourg circular on interest limitation rules

On 8 January 2021, the Luxembourg Tax Authorities issued Circular L.I.R. n° 168bis/1 (“the Circular” – available here) in relation to interest limitation rules.

The Circular provides clarifications on the rules and their definitions and concepts, as well as numerical examples. Among others, the Circular addresses the concept of symmetry as regards the interpretation of borrowing costs and interest revenues (and economically equivalent). It also provides useful guidance on the exceptions in relation to loans concluded before 17 June 2016 (grandfathering clause) and public infrastructure projects.

How KPMG can help

The additional guidance and clarifications provided by the Circular are welcome.

Interest limitation rules remain complex, and the Circular does not address all practical cases. In this respect, our tax advisors are happy to help you with any questions you may have.

Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing, or recommending to another party any matters addressed herein.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 endeavour 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.

© 2021 KPMG Luxembourg, Société coopérative, a Luxembourg entity and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

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