The Chamber of Deputies have integrated EU tax evasion rules into Luxembourg law. Pictured: The DP MPs Eugène Berger and André Bauler and DP finance minister Pierre Gramegna are seen during a parliamentary session on 12 December 2018. Photo credit: Chamber of Deputies via Flickr 

The European directive includes rules to clamp down on several common international tax evasion methods, such as profit shifting to low or no tax jurisdictions, preventing double non-taxation of income, and the use of artificial intra-company debt arrangements.

The tax consultancy KPMG said in an email newsletter on 19 December that the law:

“includes provisions related to five main topics: interest limitation, exit taxation, a general anti-abuse rule (GAAR), controlled foreign companies (CFC), and intra-EU hybrid mismatches. It also includes two additional measures, namely the modification to the rules on tax neutrality applicable to the conversion of debts and the modification to the domestic definition of permanent establishment. As mentioned before, the business-friendly approach taken by Luxembourg is to respect all requirements from the Directive, but also to use all the exemptions allowed by it”.

KPMG also stated:

“These new measures will apply to financial years starting on or after 1 January 2019, except for the provisions on exit taxation, which will apply to financial years starting from 1 January 2020.”

Bill 7318 passed by a vote of 58-0. Déi Lenk’s two MPs abstained. The bill was introduced by the DP finance minister Pierre Gramegna in June; the rapporteur was the DP MP André Bauler.