The Luxembourg government, on August 8, tabled a Bill (no7466) before the Luxembourg Parliament setting out the draft legislation that will implement as Luxembourg domestic law the EU anti-tax avoidance directive regarding hybrid mismatches with third countries (‘ATAD 2’). EU Member states have until December 31, 2019 to transpose most of the measures in ATAD 2 into their domestic laws, and must apply those provisions effective January 1, 2020.
This Draft Law, which now needs to go through the Luxembourg legislative process, may be subject to amendments before final voting by the Luxembourg Parliament. As anticipated by ATAD 2, the Draft Law generally would apply to tax years beginning January 1, 2020, with the additional ‘reverse hybrid’ measures that comprise Article 9a of ATAD 2 applying with the 2022 tax year.
Groups and investment funds should assess their situation, considering the potential impact of the precise wording of the Draft Law that applies these ‘hybrid mismatch’ measures, most of which will begin to take effect from January 1, 2020.
Tax Partner, PwC Luxembourg
Tel: + 352 49 48 48 3122