Agefi Luxembourg - juillet août 2026

Juillet / Août 2026 41 AGEFI Luxembourg Droit & Emploi ByJoãoRODRIGUES&LilianaPIEDADE, Tax Lawyers A French court has recently upheld the taxation of a hollowLuxembourg com­ pany. A tax court inDelhi has de­ clined to strip treaty benefits from a credible one. Read together, the two rulings return the substance debate to its central question: whe­ ther the entity’s account of its own role canwithstand the facts. The line they draw is factual rather than doctrinal, and far more de­ manding than any checklist. The company that was run fromFrance Coupole Finance (Case No 25NT01793, Administrative Court of Appeal of Nantes, 24 March 2026) has under­ standably attracted attention in Luxembourg, although it is, on its facts, almost oldfashioned. The court upheld the taxation in France of a Luxembourg companywhose pres­ ence in Luxembourgwas minimal, on a ground owing nothing to any modern antiabuse theory: its effective manage­ ment, the court found, was exercised fromFrance, from the home of the indi­ vidual who really ran the business, so that the company was an undertaking operated in France under Article 209 of the French tax code, with a “place of management” at that individual’s domi­ cile amounting to a permanent estab­ lishment (PE). The court’s reasoning was fairly conven­ tional, following the facts: the company ownednoproperty inLuxembourg, had no clients there and could not show that its invoices issued from there; against that, the networks it built, the exclusivity contracts it signed and the decisions that shaped its affairs all traced back to France. Board meetings convened in Luxembourg, bank statements posted to aLuxembourgaddress, andahandful of expensesbookedoutsideFrance counted for little against the absence of a real op­ erational andmanagerial footprint. In Luxembourg, where questions of crossborder structuring, treaty access and tax credibility are followed closely, Coupole Finance is a decision worth not­ ing, but not one to overstate. It is not a new“antiLuxembourgdoctrine”, but a factspecific decision concerning effec­ tivemanagement, PEandwhat happens when a Luxembourg company turns out to be run from France. It matters, too, that the underlying facts date back to the early 2000s, an erawhen lightly staffed (often, frankly domicil­ iary) Luxembourg vehicles were far more common (the same facts today would run through the current treaty and the principal purpose test (PPT) of the Multilateral Instrument (MLI), though one suspects the answer would not change). In that sense, the case feels somewhat removed from the current market. Since then, particularly post­ BEPS, Luxembourg structures have moved on considerably: governance, board conduct, documentation, gen­ uinely local decisionmaking and real operational depth are nowgenerally ap­ proachedwith far greater care. Even so, the case serves as ausefulwarn­ ing that oldweaknesses remain exposed to old challenges. The risk comes less from new rules or antiabuse doctrines than from factual vulnerabilities courts andtaxauthoritieshavealwaysbeenable to test, such as the absence of people, functions, or real decisionmaking, or a gapbetweentheroleanentityclaimsand how the business is actually run. Why “using” a treaty is not “abusing” one TheOECD’s concernabout conduit com­ panies is decades old, aimed at entities interposed in treaty jurisdictions to chan­ nel income that economically belongs elsewhere, never at a holding or invest­ ment vehiclemerelybecause it is taxeffi­ cient. Thedistinction it draws is between an entity that exercises genuine control, discretion and economic purpose over what it receives andone that operates, in substance, as afiduciaryor administrator for someone further up the chain. That distinction is worth keeping sepa­ rate, because Coupole Finance answers only the first question. Whether a com­ pany is resident where it claims, or is instead managed from and taxable in anotherState,isamatterofeffectiveman­ agement and PE; whether a genuinely resident company may nonetheless be denied a benefit is a separate matter, approached under the EU directives through beneficial ownership and the general prohibition on abuse of EU law, and under the treaties through the PPT that BEPS Action 6 introduced and the MLI carried into force. The case law illustrates the point from bothdirections.At the stricter edge sit the Danish beneficial ownership cases – N Luxembourg1 andOthers (JoinedCasesC­ 115/16, C118/16, C119/16 andC299/16) and T Danmark and Y Denmark ApS (Joined Cases C116/16 and C117/16), bothhandeddownby theCJEU’sGrand Chamber on 26 February 2019. Where an intermediate company has no real economic substance, cannot freelyuse or enjoy the income received and is effec­ tively required topass it on, the structure may be treated as abusive. A similar point emerges, in a different treatycontext, from BurlingtonLoanMan­ agement ( HMRC v Burlington Loan Man­ agement DAC , [2026] EWCA Civ 461, Court ofAppeal, 20April 2026), where a treatybenefit obtainedonordinary com­ mercial terms was held not abusive for having been foreseen and desired: what makes a benefit abusive is how it is ob­ tained, in a way that betrays the treaty’s object and purpose. ThePPT lives between thosepoles. It has made the framework deliberately less forgiving of treaty shopping anddouble nontaxation, yet it does not convert every taxsensitive choice into abuse; it asks whether, on an honest reading of purpose, facts and circumstances, grant­ ing the benefitwould run contrary to the object and purpose of the provision re­ lied on. That is a question about what the entity is anddoes, not aboutwhether relief was among the reasons it exists, which iswhy the same test candeny the conduit and spare the genuine claimant, and why it takes the facts of SC Lowy to see the point from the other side. The company that was allowed to stand That is also why SC Lowy ( SC Lowy P.I. (Lux) S.A.R.L. v ACIT , ITA No. 3568/DEL/2023, Delhi ITAT, 30 Decem­ ber 2024) offers a useful counterpoint. The Indian tax authorities’ position rested on the presence of a Luxem­ bourg entity in the ownership chain and the suspicion that this alone called treaty access into question. However, the tribunal declined to follow. Lookingpastthatpresencetothebroader investment profile – the entity’s contin­ ued existence, its operating expenditure, its taxfilings, the fact that itwasnot a sin­ gletransactionvehicle–, the tribunalwas not prepared to deny treaty benefits on broadsuspicionalone. Thedecisiondoes not validate Luxembourg holding or in­ vestment platforms as a category, given the different jurisdiction and the PPT context, but it does refuse to infer abuse fromstructure alone. Treaty relief may legitimately influence how a commercial transaction is struc­ tured, but the entity claiming that relief still has to make sense as the claimant. The facts must explainwhy the income belongs with that entity for treaty pur­ poses and not, in substance, with someone further up the chain. A com­ pany that merely receives and passes on income remains exposed. A com­ panywith a real role in the investment, a continuing business profile and evi­ dence consistent with both should not be treated as abusive simply because the structure is taxefficient. Seen from that angle, that is what makes Coupole Finance andSCLowyworth reading to­ gether. In the French case, the Luxem­ bourg company’s formal residence was not matched by the place where the business was actually managed. In the Indian case, the tribunal found enough to accept that the Luxembourgplatform was more than a conduit for one result. Neither case produces a universal an­ swer, but between them they make the same practical point: a structure is only as strong as the facts that explain it. A structure is only as strong as its facts The question is no longer whether Lux­ embourg structures need substance – thatwas settledyears ago –, norwhether everyplatformmust reproduce a full op­ erating business in the GrandDuchy, which would be as unrealistic as it is (conceptually) inaccurate. It is narrower and more demanding: does this entity have the people, functions anddecision­ making to justify the role it claims? Afi­ nancing company, a holding company and an investment platformwill not an­ swer that in the sameway, and none an­ swers it in the abstract. It is worth remembering that the EU tried to settle these questions by rule: the Unshell Directive would have reduced substance to a gateway and a checklist, presuming a shell wherever the boxes went unticked. It never commanded the unanimity it needed, and in June 2025 the Council withdrew it, folding what survives into DAC6. The instrument built to replace judgement with a test is gone, and the question it tried to codify sits backwhere the case lawalways kept it… in the facts. The argument is neither that Luxem­ bourg structures are inherently fragile nor that improved governance practices render them automatically secure, but something altogether plainer: legal form, decisionmaking and economic reality have to point in the same direc­ tion. Where they converge, SC Lowy confirms that suspicion alone should not defeat treaty access. Where they di­ verge, Coupole Finance shows that a Luxembourg address will not hold a structure together. Luxembourg substance: what SC Lowy shows and what Coupole Finance still warns against © iStock L e Luxembourg s’est retrouvé au centre des discussions européennes sur le fi­ nancement de la sécurité, de la rési­ lience et de l’innovation à l’occasiond’une conférence organisée parDLAPiper le 18 juin 2026 à la Philharmonie Luxembourg. Intitulé « Security, resilience and innovation. Luxembourg’s role in supporting Europe’s stabi­ lity », l’événement a réuni près de 150 décideurs issus des secteurs de la finance, des institutions publiques et de l’industrie afin d’échanger sur les moyens de mobiliser les investissements nécessaires face aux nouveaux défis européens. Parmi les intervenants figuraient notamment des représentants de l’OTAN, du Fonds européend’in­ vestissement (EIF), de l’initiative Defence, Security and Resilience Bank (DSRB), ainsi que des investis­ seurs actifs à travers l’Europe. Les discussions ont mis en évidence une évolution majeure : l’Europe ne se concentre plus uniquement surladéfinitiondesesprioritésenmatièredesécurité et de stabilité, mais sur leur mise en œuvre concrète. Les participants ont identifié trois enjeux principaux pour réussir cette transition. Lepremierconcernel’ampleurdesbesoinsfinanciers. Lesinvestissementsnécessairesdanslesdomainesde la sécurité, de la résilience et des technologies straté­ giques dépassent désormais les capacités des seuls financements publics. Les institutions européennes jouent ainsi un rôle croissant pour faciliter la mobili­ sation du capital privé vers des secteurs essentiels, notamment les technologies à double usage civil et militaire. Le deuxième enjeu porte sur la rapidité d’évolutiondesinnovations.Ledéveloppementaccé­ léré des technologies de pointe crée undécalage avec les mécanismes traditionnels de financement et d’achat publics, obligeant investisseurs et industriels à adapter leurs approches. Enfin, la coordination apparaît comme un facteur déterminant. Les acteurs européens cherchent à mieux rapprocher les financements, les politiques publiques et les capacités industrielles. Des initiatives comme la DSRB illustrent cette volonté de créer des mécanismes plus intégrés capables d’accompagner les investissements sur le long terme. Les échanges entre investisseurs venus notamment de Lituanie, d’Allemagne, de France et du Luxembourg ont confirmé que les capitaux existent, mais que leur déploiementdépendencoredeplusieursconditions: une meilleure visibilité des projets, des cadres régle­ mentaires stables et une gestion claire des risques. Dans ce contexte, le rôle du Luxembourg a été mis en avant comme celui d’une plateforme internatio­ nale capable de connecter investisseurs, institutions et entreprises. Lepays sepositionneainsi commeun acteur de structuration financière permettant d’ac­ compagner les besoins européens en matière de sécurité et de résilience. Lesdébatssesontfinalementconcentréssurlescondi­ tions nécessaires pour accélérer cette dynamique : comment organiser des financements à long terme, partager les risques et rapprocher les stratégies publiques des réalités des investisseurs. La soirée s’est conclue par un concert des académi­ ciensdel’OrchestrePhilharmoniqueduLuxembourg, dans le cadre du soutien continu de DLAPiper à la LuxembourgPhilharmonicOrchestraAcademy. Le Luxembourg, plateforme clé pour financer la résilience européenne ©DLAPiper