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ARTICLE · 03 AUGUST 2023

New Bill Implementing Pillar 2 Into Luxembourg Law

ELVINGER HOSS PRUSSEN, société anonyme
Explore more from ELVINGER HOSS PRUSSEN, société anonyme

Luxembourg's government council approved on 28 July 2023 a new bill aiming to implement into Luxembourg law the so-called "Pillar 2 Directive" (Council Directive (EU) 2022/2523)...

LuxembourgFinance and Banking
Elisabeth Adam
Elisabeth Adam
Isabelle Gervais
Isabelle Gervais
Nadège Le Gouellec
Nadège Le Gouellec
Aurélie Budzin-Dang
Aurélie Budzin-Dang

Luxembourg's government council approved on 28 July 2023 a new bill aiming to implement into Luxembourg law the so-called "Pillar 2 Directive" (Council Directive (EU) 2022/2523), which aims at ensuring a global minimum level of taxation for multinational enterprise (MNE) groups and large-scale domestic groups in the EU with a consolidated annual turnover of at least €750 million.

As anticipated, pension funds, investment funds or real estate investment vehicles and the said funds' direct or indirect subsidiaries are excluded from the application of the rules under certain conditions.

As a reminder, Pillar 2 Directive mainly consists of two interlocking rules, i.e. the Income Inclusion Rule (IIR) and the Under-Taxed Profits Rule (UTPR), collectively referred to as the GloBE rules, by which an additional amount of tax (called a "top-up tax") will be levied each time that the effective tax rate (ETR) of an MNE group's entities in a given jurisdiction is below 15%.

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