Potential limitation of the tax deductibility of payments made to EU blacklisted countries

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On March 25 2020, Luxembourg government approved a draft law aiming to deny the tax deductibility of interest or royalties payments made to an associated company established in a country blacklisted by the EU as non cooperative for tax purposes.

This measure follows the guidelines issued on 5 December 2019 by the Council of the EU to take action against transactions concluded with countries that are on the EU blacklist.

The current EU blacklist (as updated on 27.02.2020 by the EU Finance Ministers) includes the following countries:

  • American Samoa
  • Cayman Islands
  • Fiji
  • Guam
  • Oman
  • Palau
  • Panama
  • Samoa
  • Seychelles
  • Trinidad and Tobago
  • US Virgin Islands
  • Vanuatu 

The draft law has not yet been published and we have therefore no further details.

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