Luxembourg Implements ATAD 2 with Key Corporate Tax Amendments

On 19 December 2019, the Luxembourg Parliament approved Bill No. 7466, transposing the EU Anti-Tax Avoidance Directive (ATAD 2) — Directive 2017/952 — into domestic law. The legislation introduces significant anti-hybrid mismatch rules in line with EU efforts to prevent tax base erosion through hybrid instruments and entities.

Key legislative changes include:

• Amendments to Article 168ter of the Luxembourg Income Tax Law

• Introduction of a new Article 168quater

The bill officially enters into force on 1 January 2020, with provisions related to reverse hybrid mismatches delayed until 1 January 2022.

This transposition marks an important development in Luxembourg’s alignment with EU anti-abuse rules and has implications for multinational group structures operating through hybrid instruments or entities.