On 31 May 2022, the Luxembourg Tax Authorities published Circular L.I.R. no. 168/2 which clarifies the non-deductibility of interest or royalties paid to associate enterprises established in countries that are “blacklisted” as being “non-cooperative” for tax purposes. From 1 March 2021, the interest and royalty payments made to related entities established in non-cooperative jurisdictions are not deductible.
The Guidance clarifies about Scope of application of the defensive measure, conditions of the rules, the exception to the rule of non-deductibility, and administrative defensive measures.
