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Recent decisions rendered by the Court of Justice of the European Union (“CJEU”) seem to have put an end to investigations of the European Commission (“EC”) into tax measures of the Member States based on the state aid rules. In particular, certain tax rulings granted by the Luxembourg tax authority (“LTA”) to Fiat, Engie and Amazon groups have been characterised by the EC in the past as conveying illegal selective tax advantages. Ultimately, CJEU decisions rendered in these cases found the tax rulings not to constitute unlawful state aid.

On 12 September 2023, the European Commission adopted the proposal for a directive “Business in Europe: Framework for Income Taxation. BEFIT aims to introduce a single set of rules applicable to determine the corporate income tax base of multinational enterprises in all EU Member States as well as a simplified transfer pricing approach for assessing intercompany transactions. In the words of the EC, the Proposal is motivated by reduction of tax compliance costs for large, cross-border businesses in the European Union.

On 30 March 2023, Luxembourg Administrative Tribunal (the “Tribunal”) rendered a decision denying the use of carried forward tax losses to a Luxembourg company (“LuxCo”) based on the abuse of law provision (the “Decision”). The case concerned tax losses dating from a period during which LuxCo was a holding company, and which it intended to use after a number of years of being a dormant company in order to offset capital gain realised from the disposal of immovable property.