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By Nicolas GILLET, Partner, Transfer Pricing Leader Illia KOZINETS, Senior, Transfer Pricing, EY Luxembourg
In the recent years, many banking and insurance groups have opted to operate in different jurisdictions by using branches as opposed to a set up using subsidiaries. This development of the number of branches trigger questions from Tax Authorities around the world, in particular on the allocation of profits between the Head Office (HO) and its branches.
As a major financial center, Luxembourg is also exposed to this issue. Currently, The Tax and Transfer pricing (TP) rules currently applicable in Luxembourg do not explicitly cover the allocation of profits between the HO and its branches. In the absence of explicit references in...
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