Transfer Pricing Guidelines

On 28 January 2011, the Luxembourg direct tax authorities issued a circular (L.I.R n°164/2) (the "Circular"), which clarifies the tax treatment of Luxembourg companies that perform intra-group financing activities and sets out the framework for granting advance tax clearance concerning them. These guidelines are aimed at assisting the tax authorities and companies dealing with intra-group financing in determining their taxable basis in Luxembourg in accordance with OECD transfer pricing principles.

On 8 April 2011, the Luxembourg tax authorities issued an additional circular (L.I.R. n° 164/2 bis) (the "Additional Circular"), clarifying that existing advance tax agreements which fall within the scope of Circular will no longer be binding as of 1 January 2012 with regard to the remuneration of the intra-group financing activity. Taxpayers who wish to comply with the latest guidelines will have to file a new request with the Luxembourg competent tax authorities, covering