EC questions whether interest-free loan rulings are State aid

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March 2019

Overview

On March 7, the European Commission (EC) issued a press release announcing the opening of a State aid investigation into tax rulings granted by the Luxembourg tax authorities in relation to the treatment of interest-free loans granted by an Irish subsidiary of a group to its Luxembourg subsidiary. 

The takeaway

The decision opening an investigation is the latest in a number of high-profile cases concerning State aid and taxation. This is the first case that involves the treatment of interest-free loans. 

The text of the opening decision, which is not yet available, will be important in order to understand the EC’s detailed arguments in both this case and potentially also in other cases dealing with arm’s-length transactions and transfer pricing.

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Maarten Maaskant

International Tax Desk Leader, PwC US

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