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. 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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Transfer pricing in Luxembourg refers to the prices and conditions applied to transactions between entities of the same group, such as financing, services, royalties and sales of goods. Luxembourg law requires these prices to respect the arm's length principle, meaning they must match what independent parties would agree.
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
Ready to structure your transfer pricing?
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 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.
Request a quote: Transfer pricing
First reply within 24 working hours, from a named adviser. NDA on request before any confidential document.