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EU Taxation - Ernst & Young - Luxembourg

EU Taxation

The EU Commission recently requested Sweden to change its exit tax provisions for companies. According to Swedish law an exit tax is levied on unrealized capital gains of assets if a Swedish company is no longer taxable in Sweden upon the relocation of its seat or place of effective management to another country. This rule is also applicable for Swedish branches in the case where a permanent establishment ceases its activities in Sweden or transfers its assets to another Member State. Since such provisions are likely to dissuade companies from benefiting from the freedom of establishment, the Commission has now requested Sweden to change their tax laws.

Since the Luxembourg tax rules are to a certain extent similar to the Swedish rules that are being challenged by the EU Commission, this case would also have implications for Luxembourg. More information about the Swedish case is provided in our EU Competency Group alert no. 105.

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