The Luxembourg Parliament has adopted, on 13 May 2014,
the law (bill 6556) amending some tax provisions concerning the
area of so-called "exit tax" in order to make the exit
taxation compliant with EU law. The European Court of justice (ECJ)
held in the National Grid case (C-371/10) that EU law precludes
legislation of a Member State which prescribes – such as
previous Luxembourg law – the immediate recovery of tax on
unrealised capital gains relating to assets of a company
transferring its place of effective management to another Member
State at the time of the transfer.
In accordance with the ECJ decision, the new regime lays down
the possibility to resident corporate entities which intend to
transfer their statutory seat and place of effective management to
another Member State of the European Economic Area (EEA) to opt for
a deferral of the tax on unrealised capital gains caused by the
transfer until the actual disposal of the transferred assets. The
company may
