Whilst some countries have had comprehensive rules on controlled
foreign corporations for years, Luxembourg only introduced such
rules recently, further to the implementation of a European
directive. The position of the Luxembourg tax authorities (the
"Administration") on the new rules was therefore eagerly
awaited. Detailed guidance was finally provided in the form of a
circular issued on 4 March 2020.
A Luxembourg-resident legal entity (i. e. organisme à
caractère collectif, such as a public limited company
or a limited-liability company) or a Luxembourg permanent
establishment (hereinafter the "Company") may, under
certain conditions, be subject to the controlled foreign
corporation (CFC) rules set out in Article 164ter of the Income Tax
Act ("ITA") for tax years commencing on or after 1
January 2019.
