New rules for transfer pricing for companies

Written by: Bridgewest

Luxembourg is a country dedicated to transparency in commercial activities and a new set of rules aims to increase the level of regulation. Companies in Luxembourg will have to deal with new rules on transfer pricing, as the Luxembourg Government passed a new law on this matter, as part of a larger set of laws known as the “Zukunfstpack”. 

New requirements for documentation

The new regulations impose that, starting January 1st 2015, companies need to fulfill new requirements for documentation. Starting this year, companies will need to provide extra proof for the performed transactions.
The law on transfer pricing clarifies the company’s obligations for providing information and documentation for all of the transactions made by it. This includes transactions for goods, services, financial transactions and intellectual property. Companies will need to provide all of the documents and, in case the documentation is scarce, companies will need to prove that they are not guilty of any wrongdoing. In short, companies in Luxembourg will have to prove that they did not over-value any results. 
The burden of proof is shifted in favor of the tax authorities in Luxembourg. Companies will have to document all and any inter-company financing not on an optional basis, but as an obligation. In order to simplify the process, groups will be able to establish a transfer pricing policy.

Transfer pricing in Luxembourg 

Transfer pricing is defined as the financing transactions performed between companies. Prices are set at their market price for intellectual property rights, the sale of tangible and intangible assets.
If you want to know more about the legislation for investments in Luxembourg or you are interested in other essential information for companies and entrepreneurs, our law firm in Luxembourg can offer you consultancy and legal services.
Please contact our lawyers in Luxembourg for more information about the transfer pricing policy and how your company can make sure it observes the current legislation.