Luxembourg referred to CJEU for not transposing tax avoidance rules

The European Commission has decided to refer Luxembourg to the Court of Justice of the European Union for failing to correctly transpose EU anti-tax avoidance rules.

The Anti-Tax Avoidance Directive (ATAD1) provides for a derogation from the measures limiting the deductibility of interest payments from the corporate tax base applicable to financial undertakings.

The Directive contains an exhaustive list of entities considered as financial undertakings for this purpose.

However, Luxembourg expands the derogation also to securitisation entities, which goes beyond what is foreseen by the provisions of ATAD1.

The decision follows a letter of formal notice sent to Luxembourg in 2020 and a reasoned opinion in December 2021.

Luxembourg reply to the Commission’s reasoned opinion was not satisfactory, and Luxembourg also did not take any action to legislate a correction.