As introduced in the Luxembourg 2015 Budget Law and approved 18 December 2014, Luxembourg has strengthened its transfer pricing (TP) rules. Although Luxembourg previous TP rules included that transactions between related parties should be carried out in line with the arm's length principle, the focus was on adjustments for profit shifting abroad and assessment of hidden dividend distributions. Under the new rules, the arm's length principle is aligned with the OECD Model Tax Convention and explicitly applies to any taxpayer, regardless of legal form, and for both domestic and cross border transactions.  When profits do not meet the arm's length principle...