Advance Pricing Agreement Luxembourg

Are pre-price agreements with tax authorities possible in your jurisdiction? If so, what form do they generally take (for example. B, unilaterally, bilaterally or multilaterally) and what companies and transactions can they cover? There is no general definition of “associated companies.” Transactions with directly and indirectly related parties may fall within the scope of general transfer pricing rules. On 27 December 2016, the Luxembourg tax authorities focus on transfer pricing requirements for intragroup financing activities in Luxembourg, around L.I.R. 56/1 – 56bis/1, published on 27 December 2016 by the Luxembourg tax authorities. The focus is on risk analysis for companies that carry out intra-group financing operations. Companies should conduct an analysis to determine the risk capital required using accepted methods in this area. These companies must have the financial capacity to assume these risks. In addition, the circular stipulates that the company conducting intragroup financing operations must meet specific substance requirements in order to control risks. The Luxembourg circulars on intra-group financing contain a specific definition that applies in this regard: “Two companies are linked whether one of them participates directly or indirectly in the orientation, control or social capital of the other or where the same persons participate directly or indirectly in the management, control or social capital of the two companies.” Deloitte`s experience in the APA process includes the development of national programs, and this historical knowledge and knowledge combined with recent practical experiences helps us to help companies manage their transfer pricing issues in a forward-looking manner – particularly the risk of double taxation.

As part of the intra-group financing activity, an APP application filed with the Luxembourg direct tax authorities contains the following information: (i) the name, address and tax identification number (if available); (ii) a detailed description of the transactions; (iii) an overview of the legal structure, including information on actual beneficiaries; (iii) the tax years to which the application relates; (iv) a study on transfer pricing in accordance with OECD principles and guidelines; (v) a description of the industry and market context; (vi) the analysis of relevant tax issues by referring to the methodology used; and vii) confirm that the information provided is complete and provide an accurate overview of the transaction or transactions.

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