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Bill implementing the Anti-Tax Avoidance Directive 2 on hybrid mismatches

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Schaffner Jean
Jean Schaffner

Partner

Luxembourg

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Image of Patrick Mischo
Patrick Mischo

Office Senior Partner

Luxembourg

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Kerger Franz
Franz Kerger

Counsel

Luxembourg

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Tschurtschenthaler Johanna
Johanna Tschurtschenthaler

Counsel

Luxembourg

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Image of Guilhem Becvort
Guilhèm Becvort

Counsel

Luxembourg

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Alexandre Olympe
Olympe Alexandre

PSL-Senior Associate

Luxembourg

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13 August 2019

On 8 August 2019, the Luxembourg government submitted Bill n° 7466 implementing Directive 2017/952 (ATAD 2) to the Parliament (the Bill). 

The Bill extends the existing anti-hybrid rules applicable within the European Union (EU) as introduced by Directive 2016/1164 (ATAD 1) to cover hybrid mismatches involving non-EU countries and additional hybrid mismatches.

In a nutshell, a hybrid mismatch (i.e. double deduction or deduction without inclusion) results from the difference in the characterisation of a financial instrument or of an entity in different countries.

The Bill contains much appreciated clarifications made by the Luxembourg government regarding the treatment applicable in case of tax exempt investors as well as regarding the ‘acting together’ concept.

Most of the ATAD 2 provisions must be implemented into Luxembourg tax law before year-end and apply as from 1 January 2020.

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