Intragroup financing in Luxembourg, structure debt, secure deductibility.
Intragroup financing organises loans and financial flows within a group through a Luxembourg company. Its robustness rests on an arm's length margin, real substance and compliance with the interest deduction limitation. Financial Services Luxembourg documents, computes and ensures compliance; legal opinions and reserved acts are coordinated with our partner lawyers and notaries.
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Intragroup financing in Luxembourg is the activity of a Luxembourg company that grants loans, advances or other financial instruments to related entities of the same group, usually through a dedicated financing company. Its tax treatment depends on arm's length pricing, real substance in Luxembourg and the interest deduction limitation rule.
Arm's length on financing transactions: art. 56 and 56bis LIR, circular LITL no. 56/1-56bis/1 of 27 December 2016 (risk capital, margin). Interest deduction limitation: art. 168bis LIR (ATAD transposition).
Key takeaway
- A financing company must have substance and risk-bearing capital.
- The margin must be arm's length and documented (2016 circular).
- Interest deduction is capped by art. 168bis LIR (ATAD).
Further reading: SOPARFI Luxembourg and holding company in Luxembourg. In-depth analysis: Financing company substance in Luxembourg.
Who this is for
- Groups centralising financing through a Luxembourg entity
- Holdings and SOPARFIs lending to subsidiaries
- Acquisition vehicles carrying debt
- Cash pooling and group treasury companies
What we do
- Structuring of the financing company (capital, instruments)
- Arm's length margin determination and documentation
- Interest deduction limitation scoping (art. 168bis LIR)
- Substance, governance and accounting
- Transfer pricing and loan agreement coordination
Ready to structure your intragroup financing?
First reply within 24 working hours, from a named adviser. Firm quote within 48 working hours once the scope is defined. NDA on request before any confidential document.
Official sources and verification
This page is published under the editorial responsibility of Mickaël LOC for Financial Services Luxembourg (business permit 10077274). The rules cited should be checked against competent authorities and the circumstances of the case.
Frequently asked questions
What is an intragroup financing company?
A Luxembourg company lending to related entities. Its remuneration must be arm's length, justified by real substance and risk-bearing capital, in line with the circular of 27 December 2016.
Is interest always deductible?
No. Art. 168bis LIR, from ATAD, caps the deduction of exceeding borrowing costs (in principle 30% of tax EBITDA or EUR 3 million, whichever is higher), with exceptions. We scope your situation.
What substance for a financing company?
Decision-making bodies in Luxembourg, real competence, capital suited to the risk borne and local accounting. We calibrate substance with you.
Must intragroup loans be documented?
Yes: loan agreements, arm's length analysis and transfer pricing documentation are essential to defend the tax treatment.
Request a quote: Intragroup financing
First reply within 24 working hours, from a named adviser. NDA on request before any confidential document.