Luxembourg Approves Changes to Participation Exemption | KPMG | CA

Luxembourg Approves Changes to Participation Exemption

Luxembourg Approves Changes to Participation Exemption

Global Tax Adviser, January 19, 2016.Luxembourg has approved a set of tax measures affecting corporate taxpayers, including changes to its participation exemption regime. These measures will generally apply starting January 1, 2016.


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Among its legislative measures, Luxembourg has introduced a general anti-abuse rule and an anti-hybrid rule into the Luxembourg domestic participation exemption regime that mirrors amendments to the EU Parent-Subsidiary Directive. The new rules in this area are in line with the wording and scope of the Directive. As a result, the provisions have been worded to explicitly clarify that the measures do not apply to dividend distributions relating to non-EU companies or dividend distributions which are not covered by the EU Parent-Subsidiary Directive.

Other new Luxembourg tax measures include:

  • Enlargement of the scope of the fiscal (tax) unity regime to tax groups formed by "sister companies" without their parent company being part of the tax unity, introducing the concept of "horizontal" fiscal unity,
  • Changes to the minimum corporate income tax and withholding tax rules, 
  • A repeal of the intellectual property regime (as recommended by the OECD in the BEPS Action 5 report.)

For more information, contact your KPMG adviser. 


Information is current to January 19, 2016. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500. 

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