Luxembourg: Corporate Tax

In its decision of 22 July 2026 (case 53194C), the Luxembourg Administrative Court, the Luxembourg court of appeal in tax matters, rendered an important transfer pricing judgment concerning the application of the arm's-length principle to the restructuring of intra-group debt and the deductibility of interest expenses.

The European Commission challenged Luxembourg's decision to exempt securitisation special purpose entities from EU interest deduction limitations, arguing the exemption list is exhaustive. Advocate General Kokott has now recommended dismissing this infringement action, finding that regulated SSPEs are economically comparable to other exempt financial undertakings and should be treated equally under EU law.

Luxembourg has introduced a draft law establishing a new tax framework for employee stock option plans, creating a favorable regime for qualifying young innovative companies while codifying the general tax treatment for all other stock option arrangements. The proposal aims to defer taxation until share disposal for eligible companies, potentially reducing the effective tax burden to approximately 11.45% while addressing practical liquidity constraints for employees.

Luxembourg has issued a Grand-Ducal Regulation identifying jurisdictions where constituent entities may benefit from an exemption from filing the Global Information Return (GIR) locally.

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Instead, the general principle of substance over form applies to determine the tax classification of an instrument as debt or equity, requiring an economic and financial analysis of each transaction.

On 17 July 2024, the Luxembourg government introduced, under new Bill n° 8414, a comprehensive legislative package meant to modernise and enhance Luxembourg's tax system.

On 17 July 2024, the Luxembourg Minister of Finance presented to Parliament a bill of law (the "Bill") providing a certain number of measures aiming at strengthening the purchasing power of households...

On 17 July 2024, the Luxembourg government released a bill of law proposing a number of tax cuts for both individuals and corporations. This is in line with the political commitments made by the current government...