LuxCMA technical position paper November 2020
The Financial Services Commission (FSC) has issued on 2 October 2020, pursuant to its powers under Section 7(1)(a) of the Financial Services Act 2007 (FSA), its revised “Guidelines on Fitness and Propriety” (Guidelines) in line with the FSC objective to ensure the sound conduct of business in the financial services and global business sectors. These revised guidelines supersede the Guide on Fitness and Propriety previously issued by the FSC on 9 June 2020.
The Luxembourg law implementing the European Union (EU) Anti-Tax Avoidance Directive (ATAD) introduced certain tax provisions, among which a limitation to interest deductibility and rules countering hybrid mismatches within the EU, that apply for the first time with respect to financial years starting on or after 1 January 2019. These rules have been completed by a further law transposing ATAD 2, with effect from financial years starting on or after 1 January 2020, which extends the territorial scope of the anti-hybrid mismatch provision to third countries.
These new rules raise numerous questions in relation to the deductibility of payments that are typically due by debtfinanced securitization companies. The ATAD and Securitization working group of the Luxembourg Capital Markets Association (LuxCMA)1 has therefore reflected on the various issues that such securitization companies may be confronted with and has summarized its technical analysis in the LuxCMA “Technical Position Paper on Deductibility of Payments by Securitization Companies Financed by Debt” that was released on 26 October 2020. The paper is available for members only through the LuxCMA website.