Luxembourg Tax Authority issues guidance on defensive measure related to EU-listed non-cooperative jurisdictions

Executive summary

Starting in March 2021, Luxembourg has applied a defensive measure towards countries listed on Appendix I of the European Union (EU) list of non-cooperative jurisdictions for tax purposes (the EU List). Under certain circumstances, the deduction of interest and royalties owed by Luxembourg corporate taxpayers to related enterprises that are corporations established in a jurisdiction that is on Annex I of the EU List is denied, unless the taxpayer proves that the transaction that…