Luxembourg Tax Agency Issues Circular Clarifying ATAD Interest Deduction Limitation Rules

The Luxembourgish Inland Revenue March 25 issued Circular No. L.I.R.168bis/1, clarifying interest deduction limitation rules under the EU anti-avoidance directive (ATAD). Topics covered include: 1) the scope of the rules, including relevant definitions; 2) the 30 percent interest deduction limit, based on earnings before interest, taxes, depreciation, and amortization (EBITDA) in an assessment year; 3) the additional borrowing threshold of up to 3 million euros (US$3.3 million) for deductions; 4) the carry-forward of unused interest deduction capacity over five years; 5) a clarification on the group escape rule for members of a tax integrated group; 6) exclusions from the directive; ...