Tax Newsflash - Decision on a profit participating loan from a transfer pricing and tax perspective

Variable interest debt instruments have long been used in Luxembourg to finance equity or debt investments. Their mechanism notably allows for the repatriation of most of the income realized on an asset as variable deductible interest expense, exempt of taxes. Following years of uncertainty regarding the delimitation of eligible income to be paid as variable interest and the application of transfer pricing rules on these instruments, a recent court case brings some much needed clarity regarding their tax treatment.

Keep reading in the newsletter below...