TAX, 01Aut. 10077274 · 142 Boulevard de la Pétrusse, Luxembourg

Transfer pricing in Luxembourg, arm's length, documented and defensible.

Transfer pricing is the conditions applied to transactions between related companies; in Luxembourg they must respect the arm's length principle (art. 56 and 56bis LIR) and be documented. We prepare the analysis and documentation. FSL documents, computes and ensures compliance; legal opinions and reserved acts are coordinated with our partner lawyers and notaries.

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In short

Transfer pricing refers to the prices and conditions of transactions between entities of the same group (financing, services, royalties, goods). Luxembourg law requires them to respect the arm's length principle and that compliance be documented and defensible before the authorities.

Reviewed by Mickaël LOCManaging Director · Licensed fiduciary 10077274 · Updated 2026ProfileLinkedIn
Legal basis

Arm's length principle: articles 56 and 56bis LIR. Documentation expectations set out in circular LITL no. 56/1-56bis/1 of 27 December 2016 (intragroup financing companies) and aligned with OECD principles. Cross-border arrangement reporting: DAC6.

Key takeaway

  • Intragroup transactions must respect the arm's length principle (art. 56/56bis LIR).
  • Documentation is what makes the position defensible on audit.
  • Financing companies require adequate substance and remuneration.

Who this is for

  • Groups with intragroup transactions (financing, services, royalties)
  • Financing companies and holdings lending to related entities
  • Structures claiming a favourable regime linked to intragroup flows
  • Groups exposed to audit or information exchange

What we do

  • Mapping of intragroup transactions and risks
  • Comparability analysis and arm's length margin determination
  • Documentation (local file / master file) that holds up
  • Financing-company scoping (substance, risk capital)
  • Coordination with DAC6 reporting where relevant

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Preparation checklist

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FAQ

Frequently asked questions

What is the arm's length principle?
The rule that transactions between related entities must be concluded on the same terms as those agreed between independent parties. It is enshrined in articles 56 and 56bis LIR.
Is transfer pricing documentation mandatory?
The taxpayer must be able to justify the arm's length nature of its intragroup transactions. Structured documentation (local file and, where relevant, a master file) is the best protection on audit.
What margins for an intragroup financing company?
Circular LITL no. 56/1-56bis/1 of 27 December 2016 frames the arm's length remuneration of financing companies, in connection with substance and risk capital. We perform the analysis.
What is the link with DAC6?
Certain cross-border arrangements must be reported under DAC6; we check whether your intragroup transactions are concerned.
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