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ARTICLE · 14 JANUARY 2021

Luxembourg Tax Authorities Issue Circular On Interest Deduction Limitation Rules

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On 8 January 2020, the Luxembourg tax authorities issued a new Circular n° 168bis/1 (the "Circular") in order to provide guidance on the interpretation of the interest deduction limitation rules ("IDLR")...

LuxembourgTax
Antoine Dupuis
Antoine Dupuis
Andreas Medler
Andreas Medler

On 8 January 2020, the Luxembourg tax authorities issued a new Circular n° 168bis/1 (the “Circular”) in order to provide guidance on the interpretation of the interest deduction limitation rules (“IDLR”) laid down in Article 168bis of the Luxembourg income tax law (“LITL”).

Article 168bis of the LITL has transposed the Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices (“ATAD 1”) into Luxembourg law and has been applicable since 1 January 2019. Since the Circular merely has clarifying character with regard to the interpretation of existing legal provisions and does not constitute a new legal basis itself, the IDLR shall be interpreted according to the Circular for all tax years from 2019.

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