Reverse hybrid rules playing major role in funds
The Luxembourg government clarified its application of the reverse hybrid rule in the EU’s second anti-tax avoidance directive (ATAD-2) last November, in 2022. It made clear that tax-exempt investors are exempt from the application of the reverse hybrid rules and clarified when they do apply to other investors. With the “quite helpful” clarification bringing simplification in one area, the quest for certainty has moved to related issues, such as allocating the potential tax burden if a given investor triggers it.
Impact of OECD “structured formal garden” for tax rules
The new corporate taxation rules from the Organisation for Economic Co-operation and Development (OECD) join earlier reforms that collectively pose economic and fiscal risks to the Luxembourg economy, according to the International Monetary Fund (IMF). Tax experts say it is possible that some non-financial multinationals located here might decide to leave because of the new OECD rules.