On 28 January 2021, the Luxembourg Parliament has approved Bill No. 7547 introducing a non-deductibility of interest or royalties paid to associate enterprises established in countries that are “blacklisted” as being “non-cooperative” for tax purposes. The measures provide that interest and royalty payments made to related entities established in non-cooperative jurisdictions will not be deductible, considering the latest published version of the EU list as of that date. This measure shall be applicable as of 1 March 2021 instead of 1 January 2021. The measure shall only be applicable to interest or royalties paid or due as of 1 March 2021.
The “blacklist” will be the same as the most-recent list then published by the EU Council of countries and territories that the EU regards as “non-cooperative” for tax purposes. As of 6 October 2020, there are 12 jurisdictions on the EU blacklist: American Samoa, Cayman Islands, Fiji, Guam, Oman, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, US Virgin Islands, and Vanuatu.
