Transfer pricing in Luxembourg at a glance
|Regulation Type||OECD / national regulations|
|Are there specific transfer pricing regulations?||Yes|
|Submission deadline upon request||N/A|
|Annual update required||No|
|Official language requirements||Luxembourgish, German, French, English|
|Potential impact of penalties||N/A|
Luxembourg tax law
Rules for transfer pricing in Luxembourg are based upon:
- Income Tax Law (ITL) Article 56 and Art. 164 paragraph 3 ITL
- Circular ITL NS No.164/1 dated 9 June 1993
- Circular ITL No.164/1 dated 23 March 1998
- Circular L.I.R. 164/2 dated 28 January 2010
- Circular 164/2 bis LITL issued on April 8, 2011
The OECD Guidelines are not incorporated in Luxembourg tax law. As a consequence, the arm’s-length nature of intercompany transactions may also be established with reference to other generally accepted transfer pricing guidelines or regulations.
Rules for transfer pricing in Luxembourg do not prescribe the use of any specific method nor is there a priority of methods. However, the methods provided by the OECD are in general accepted
Information that should be provided:
Luxembourg tax law includes general documentation requirements, but does not provide specific transfer pricing documentation regulations. Thus, intercompany transactions should always be supported at least by appropriate agreements and other supporting legal documentation. With reference to the circulars on intra-group financing transactions, transfer pricing documentation supporting the remuneration needs to be compliant with the OECD Guidelines.
Moreover, for all new financing transactions, the tax authority may request supplementary information supporting the transfer prices applied on intercompany transactions at the time they are executed. In this respect reference is also made, in principle, to the OECD Guidelines for adequate documentation.
Luxembourg is also adhering to the EU Code of Conduct on Transfer Pricing Documentation for Associated Enterprises in the EU. As a consequence, contemporaneous transfer pricing documentation available at headquarter level may also be used in Luxembourg to support the arm’s length nature of intercompany transactions.
Several languages are accepted in Luxembourg, namely:
- English (not officially, but generally accepted)
There is no statutory deadline for the preparation of documentation.
Deadline to submit upon request
Documentation must be attached to an advance pricing agreement application at the time of submission.
Advance Pricing Agreements
In Luxembourg, there is no formal procedure to obtain an Advance Pricing Agreement. Taxpayers may request a unilateral tax clearance from the Luxembourg Tax Authority for guidance on the application of Luxembourg tax law.
There are no specific transfer pricing penalties. There are no specific transfer pricing penalties, meaning that oordinary tax penalties apply.