New Luxembourg tax legislation on payments to EU-listed "non-cooperative" countries - update


In brief

The Luxembourg income tax law provisions that govern the tax deductibility of expenses incurred by corporate taxpayers are changing with effect from 1 March 2021. A new provision disallows the tax deduction of interest or royalties accruing as due from that date to a related party, if the beneficiary is a corporate entity established in a country that is listed by the Council of the European Union as being “non-cooperative” for tax purposes. A revised version of this “non-cooperative” jurisdictions list was approved by the Council on 22 February 2021, and publication in the Official Journal of the EU of the revised list is expected imminently.

Two changes were made to the previous version of the list, as follows:

  • Barbados was removed.
  • Dominica was added.

As a consequence, payments of interest or royalties to Barbados should in no way be affected as a result of the new Luxembourg provision taking effect, despite the fact that Barbados had been listed as a “non-cooperative” jurisdiction until February 2021.

Full details of the new Luxembourg provision, and the full list of jurisdictions that should be affected once it takes effect, can be found here. This has been updated, mainly to reflect the changes noted above.  

Contact us

Gerard Cops

Tax Services Leader, PwC Luxembourg

Tel: +352 49 48 48 2032

Sami Douénias

Tax Partner, PwC Luxembourg

Tel: +352 49 48 48 3060

Alina Macovei

Tax Partner, PwC Luxembourg

Tel: + 352 49 48 48 3122

Vincent Lebrun

Tax Partner, PwC Luxembourg

Tel: +352 49 48 48 3193

Thierry Braem

Alternatives Tax Leader, PwC Luxembourg

Tel: +352 49 48 48 5106

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