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By Vincent REMY, EY Luxembourg Partner, Private Debt Leader and François MANSET, EY Luxembourg Partner, Private Debt Tax
When the EU Commission introduced the Anti-Tax Avoidance Directives in 2019 and 2020, it included provisions dealing with the taxation of reverse hybrid entities. The purpose of these rules is to tackle situations where investors treat tax-transparent partnerships as corporations (“blockers”).
In that setting and since 2022, Luxembourg tax-transparent partnerships (such as a SCS or SCSp – referred to as SCSp only for the purpose of this article), which are otherwise tax-free vehicles, may become subject to Luxembourg corporate income tax (at a rate of c. 18%) if certain conditions are fulfilled.
These...
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