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ARTICLE · 21 MAY 2020

Luxembourg Securitisation Vehicles Could Be Removed From ATAD I Exemption

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On 14 May 2020, the European Commission (″EC″) sent formal notice letters to advise Luxembourg and Portugal to remove the exemptions from interest limitation rules currently available to certain securitisation vehicles...

LuxembourgFinance and Banking
James O'Neal
James O'Neal
Arnaud Arrecgros
Arnaud Arrecgros
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On 14 May 2020, the European Commission (″EC″) sent formal notice letters to advise Luxembourg and Portugal to remove the exemptions from interest limitation rules currently available to certain securitisation vehicles ("SVs"), claiming that the respective provisions of applicable domestic legislation go beyond the allowed exemptions under Article 4 of the EU Anti-Tax and Avoidance Directive I (″ATAD I″).1

Notably the EC's announcement states that the current legislation allows for unlimited deductibility of interest for certain SVs, which in the EC's interpretation, do not qualify as ″financial undertakings″ as defined under ATAD I.

The announcement also advised that, should Luxembourg and Portugal not amend their legislation in the next four months, the EC might send a reasoned opinion to the Luxembourgish and Portuguese authorities.

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