On Friday 14 July, the European Commission decided to file a case in the Court of Justice of the European Union against Luxembourg for failing to correctly transpose the Anti-Tax Avoidance Directive (2016/1164) (see EUROPE 11514/19).
The Anti-Tax Avoidance Directive (ATAD 1) provides for a derogation from the measure limiting the deductibility of interest payments from the corporation tax base applicable to financial undertakings. The directive contains an exhaustive list of entities considered to be financial undertakings for this purpose. However, Luxembourg also grants the derogation to securitisation entities, which are not considered to be financial undertakings under the ATAD 1 Directive.
In May 2020, the Commission sent a letter of formal notice to Luxembourg, followed by a reasoned opinion on 2 December 2021, asking it to amend its legislation within two months. As Luxembourg’s response to the Commission’s reasoned opinion was not satisfactory, the Commission decided to refer the matter to the Court of Justice of the European Union.
The ‘ATAD 1’ Directive contains five legally binding anti-abuse measures that all Member States must apply to combat common forms of aggressive tax planning. It came into force on 1 January 2019. Member States were required to adopt and publish the laws, regulations and administrative provisions necessary to comply with the directive by 31 December 2018. (Original version in French by Anne Damiani)