ATOZ Insights - July 2022


Summer is already in full swing, so it is time to provide you with a few insights on what happened in Luxembourg and abroad over the past few months.

In June, the long-awaited new double tax treaty between the UK and Luxembourg was finally signed. We present the most important changes to be introduced by the new treaty, which, for some of them, may have a significant impact on Luxembourg entities with real estate investments in the UK. Also in June, a draft law implementing the 7th version of the Directive on Administrative Cooperation in the field of taxation (“DAC7”), on digital platforms, into domestic legislation was presented to the Luxembourg parliament. We summarise the changes to be introduced, which will apply as from next year. The Luxembourg tax authorities have also been quite productive over the past months in terms of releasing clarifying guidelines, including one on the Luxembourg administrative and legislative defensive measures against non-cooperative tax jurisdictions.  
At EU level, the European Commission keeps on working on reforming the corporate tax system with, among others, a new EU Directive Proposal called “DEBRA” introducing a kind of notional interest deduction (the debt-equity bias reduction allowance) and new rules limiting, once again, the deductibility of interest for corporate income tax purposes. At the same time, the EU is still trying to reach an agreement on its pillar two directive proposal. We explain where we stand in the legislative process and explain why the proposal could not be adopted so far

As far as VAT is concerned, we comment some recent case-law on the VAT deduction rights of holding companies and on the liability of company directors

Finally, the CSSF released some new guidance for consumers investing in virtual assets with the aim of helping consumers, who despite the risks inherent to virtual assets are willing to invest in them. The CSSF outlines some minimum steps to be taken before investing, which we present and which are built on two pillars: Educate yourself and prefer regulated entities.

We hope you enjoy reading our insights.

The ATOZ Editorial Team