EU Commission requests LUXEMBOURG and PORTUGAL to amend their legislation transposing the Anti-Tax Avoidance Directive
The Commission decided today to send letters of formal notice to Luxembourg and Portugal asking them to correctly transpose the interest limitation rule of the Anti-Tax Avoidance Directive(Article 4 of the Council Directive (EU) 2016/1164).
Both Member States make use of the possibility to exempt financial undertakings from the interest limitation rules in the Anti-Tax Avoidance Directive.
The respective pieces of domestic legislation, however, go beyond the allowed exemptions and provide unlimited deductibility of interest for the purpose of Corporate Income Tax, including securitisation entities, which do not qualify as “financial undertakings” under the Anti-Tax Avoidance Directive.
If Luxembourg and Portugal do not act within the next four months, the Commission may send a reasoned opinion to the Luxembourgish and Portuguese authorities.