TRANSFER PRICING AND RELATED DOCUMENTATION REQUIREMENTS (BOOK INCLUDED)
Luxembourg companies may enter into diverse commercial and financial transactions with associated enterprises. The prices charged in regard to these controlled transactions are called transfer prices. For Luxembourg tax purposes, these prices have to adhere to the “arm’s length principle”.
The arm’s length principle is the international transfer pricing standard that OECD member countries have agreed should be used for tax purposes by MNE groups and tax administrations. The arm`s length principle requires that the remuneration for any transaction between related parties conform to that what would have been agreed if the transaction were to have taken place between unrelated parties under comparable circumstances.
The arm’s length principle is firmly ingrained in Luxembourg tax law and has been explicitly stated in article 56 of the Luxembourg Income Tax Law (LITL). In addition, several concepts and provisions under Luxembourg tax law require the arm’s length standard to be respected by Luxembourg companies (the concepts of hidden dividend distributions and hidden capital contribution, etc.).
Over the last years, transfer pricing has become the hot topic in Luxembourg taxation in an environment that relies increasingly less on tax rulings. In the past, tax rulings were viewed as a way to provide certainty and to avoid risks when implementing investments or intra-group transactions. However, for a number of reasons this is no longer the case and transfer pricing documentation is more and more filling the gap as a tax risk management tool.
As a member of the OECD, Luxembourg adheres to the organization’s Transfer Pricing Guidelines which reflect the consensus of OECD Member countries towards the application of the arm’s length principle as provided in article 9(1) of the OECD Model Tax Convention.
In 2020, a new chapter X has been added to the OECD Transfer Pricing Guidelines that provides guidance on transfer pricing aspects of financial transactions which are a common phenomenon in Luxembourg.
The OECD further released guidance on the transfer pricing implications of the COVID-19 pandemic. Indeed, as the political response around the globe in order to stop the spread of the virus (lockdowns, travel restrictions, etc.) results in an unprecedented economic downturn, this may also have an impact on the transfer pricing analysis and requires due consideration.
OBJECTIVES OF THE WORKSHOP
Upon successful completion of this workshop, the participants will:
o have an overview of the Luxembourg transfer pricing environment
o have an overview of the OECD Transfer Pricing Guidelines and the new guidance
introduced as part of the OECD BEPS Project
o have a better understanding on Luxembourg transfer pricing rules and practices including the new Circular on the transfer pricing treatment of financing activities (Circular L.I.R. 56/1 and 56bis/1 released on December 27, 2016)
o understand the impact of transfer pricing rules on the tax positions of Luxembourg companies
o understand the importance of transfer pricing documentation in a company’s risk management strategy
Introduction to transfer pricing
o The arm’s length principle
o The OECD Transfer Pricing Guidelines
o Luxembourg transfer pricing rules
Typical controlled transactions in Luxembourg
o Interest rates
o Financing activity
o Intra-group services
o Fund management services
o Scope of the Transfer Pricing Circular
o Substance requirements
o Determining an arm’s length remuneration
o Transfer pricing analysis
o Structure alignments in relation to existing investments
o Treatment in the corporate tax returns
o Advance pricing agreements (APAs)
Transfer pricing documentation
o Review of transfer pricing and a taxpayer’s co-operation duties
o The OECD Transfer Pricing Guidelines
o Best Practice recommendations
Case study : The Luxembourg Real Estate Fund
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Oliver R. Hoor, Tax Partner, ATOZ Tax Advisers
Oliver is a Partner in the International and Corporate Tax department of ATOZ. A tax professional since 2003, Oliver has experience in Luxembourg and international taxation with a focus on alternative Investments (private equity, real estate, sovereign wealth funds, hedge funds), mergers & acquisitions and multinational groups. Oliver advises clients on all direct tax aspects regarding deal structuring, maintenance, reorganisations and exit planning.
He is Head of Transfer Pricing and the German Desk. Oliver is further a member of the tax working groups of the Association of the Luxembourg Fund Industry (ALFI) and the Luxembourg Private Equity Association (LPEA).
Oliver is the author of more than 250 articles and books on Luxembourg and international taxation including Transfer Pricing and related documentation requirements, the OECD Base Erosion and Profit Shifting (“BEPS”) Project and the EU Anti-Tax Avoidance Directives (ATAD 1 & 2), reporting obligations of tax intermediaries (DAC 6), the OECD Model Tax Convention and Tax Treaties, EU Law and the State Aid investigations of the EU Commission. He is also a regular speaker at conferences as well as a lecturer with Legitech and ILA.
Oliver is qualified as a Chartered Accountant in Luxembourg (“Expert-Comptable”) as well as a certified German tax adviser (“Steuerberater”). He holds a post-graduate degree in Luxembourg Tax and a degree in Business Administration with a major in Tax from the University of Applied Sciences of Trier (Germany).
This half-day training course is approved by the Luxembourg Bar Association within the framework of continuing education.
Student rate: 48,55€ VAT not included, i.e. 50€ TTC.
Provided you send a copy of your student card and proof of registration.