Parliament votes on law to fight aggressive tax planning structures


On Twitter Gramegna called the bill an important step for the grand duchy in fighting aggressive tax planning structures. Photo: Matic Zorman 

“Today [Luxembourg] takes another important step in the fight against aggressive tax planning structures,” finance minister Pierre Gramegna (DP) announced on Twitter.

In March 2020 he had submitted a bill aimed at complementing section 168 of the Income Tax Act amended on 4 December 1967. It is intended to add a new point outlining the conditions for the non-deductibility of interest or royalty expenditure due in connection with non-cooperative countries or territories for tax purposes.

The bill follows the conclusions approved by the Council of the European Union in December 2017 regarding the list of non-cooperative countries and territories for tax purposes. This list combined with defensive measures are intended to encourage targeted countries and territories to improve their cooperation in this area which would in turn enable them to be removed from the list.

In alignment with the conclusions established in 2017, EU member states have agreed to apply at least one defensive measure of administrative nature against these non-cooperative countries and territories.

Additionally, in 2019, member states decided to supplement said defensive measure with at least one legislative one, following the council of the European Union’s adoption of the guidelines of the code of conduct group (business taxation) on enhanced coordinated defensive measures.

The bill voted in parliament on Thursday therefore intends to introduce such legislation in Luxembourg order to block tax deductions for companies in non-cooperative countries or territories that figure on the EU’s blacklist.