With the implementation of the anti-tax avoidance directive (ATAD 1), Luxembourg has introduced Interest Limitation Rules (ILR) in Article 168bis of the Luxembourg income tax law (LITL). The Luxembourg tax authorities issued an administrative circular providing guidance on their interpretation of the ILR (ILR Circular) on January 8.
In light of this guidance, taxpayers should continue assessing how the ILR might impact their business, noting that the ILR is effective with tax years beginning on or after January 1, 2019. In particular, taxpayers relying on the grandfathering rule should review and monitor subsequent modifications. The ILR Circular, with its numerous examples, also may be helpful for tax practitioners and return preparers.