The European Commission made this announcement on 14 July, highlighting concerns surrounding the ATAD1 directive.
This directive provides for a derogation from the measure limiting the deductibility of interest payments from the corporate tax base applicable to financial undertakings. However, the Commission deems Luxembourg’s interpretation of this derogation too lenient, as it also applies them to securitisation entities that do not qualify as financial undertakings according to the directive.
In 2020, Luxembourg had already been made aware of this problem by Brussels via a letter of formal notice. The Commission found the country’s responses unsatisfactory, which is why it has now decided to refer the case to the Court of Justice.
