The Luxembourg Administration of Direct Tax (Administration des Contributions Directes) has published Circular L.I.R. n° 168quater/1 of 9 June 2023, which provides guidance on the taxation of reverse hybrid entities under Article 168quater of the Luxembourg Income Tax Law. Key points include:
- The taxable income of a reverse hybrid would principally be determined under the cash accounting method, meaning that the entity would not be subject to tax in Luxembourg absent the actual receipt of i…