2020 saw many EU Court cases impacting the Luxembourg market and requiring the law maker to ensure compliance with key decisions. What does this mean for Luxembourg? We review the key decisions below.
With another amendment made to the fiscal unity regime, here’s a quick recap of all the changes made from 2015 until present day.
As of 2015:
Court of Justice of the EU (CJEU) decision 14 May 2020 (C-749/18):
Budget law 2021: amendment to the fiscal unity regime complying with EU law.
Conditions for neutral switch from vertical to horizontal fiscal unity:
The CJEU decision on 2 April 2020 (C-458-18) sparked the response by the Luxembourg tax authority with the Luxembourg Circular dated 1 December 2020. The Circular covers the application of Luxembourg participation exemption regime for companies established in Gibraltar.
The Circular states that from 1 January 2021, NWT exemption on Gibraltarian subsidiaries and exemption from CIT and MBT on inbound dividend from Gibraltar do not apply anymore, unless the comparable tax test is met. Additionally, the withholding tax (WHT) exemption on dividend to Gibraltar resident companies will no longer apply.
Alignment with CJEU decisions