Luxembourg Reverse Hybrid Entity Rules: Clarifications Regarding The CIV Exemption

On 22 August 2025, the Luxembourg tax authorities issued a second circular (Circular) on the reverse hybrid entity rules, this time clarifying the exemption applicable to collective investment vehicles (CIV Exemption).¹

The reverse hybrid entity rules do not apply to collective investment vehicles (CIVs), defined as investment funds or vehicles that (i) are widely held, (ii) holds a diversified portfolio of securities, and (iii) are subject to investor protection regulations in the jurisdiction in which they are established.

The Circular states that certain funds fall directly within the scope of the definition of a CIV, which appears to imply that the three above-mentioned required conditions are presumed to be met. However, in line with the current administrative jurisprudence in Luxembourg tax matters, such a presumption can only be considered rebuttable, as circulars issued by the Director of the tax authorities cannot create new legal norms and are not