The Luxembourg law implementing the Directive on hybrid
mismatches (the "ATAD2
Law")1, targets – amongst other
issues – mismatches in tax outcome arising from reverse
hybrid entities ("RHE").
As a reminder, RHEs are Luxembourg tax transparent entities -
such as SCS and SCSp - that are treated as tax opaque in the
jurisdiction of the investor and which may, as a result thereof,
become taxable in Luxembourg under certain conditions.
A carve out to the RHE rule is provided under the ATAD2 Law for
collective investment vehicles ("CIV")
that (i) are widely held, (ii) hold a diversified portfolio of
securities and (iii) are subject to investor-protection regulation
in the country in which they are established.
