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By Oliver R. Hoor and Pierre Kreemer
On 7 February 2013, the Luxembourg Administrative Court of Second Instance (Cour administrative) gave its decision further to that of the Luxembourg Administrative Court of First Instance (Tribunal administratif) which overruled long-standing administrative practice regarding the treatment of corporate debt waivers for Luxembourg tax purposes. This note addresses the facts and reasoning of these decisions and analyses the practical implications for Luxembourg companies.
I. Introduction
Corporate debt waivers are part of many financial reorganizations as they are a straight-forward means for shareholders to increase the capital endowment of their subsidiaries. While for accounting purposes, debt...
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