Executive summaryOn 2 June 2021, the Luxembourg Tax Authorities updated the Circular originally issued on 8 January 20211 clarifying certain technical aspects of the interest limitation rules introduced in the Luxembourg legislation by law in 2018 (the Law). The Law implements the European Union (EU) Anti-Tax Avoidance Directive 2016/1164 (2016) (ATAD).2 These rules limit the deductibility of taxpayers’ borrowing costs to the higher of 30% of taxable EBITDA (Earnings (taxable profits) before Interest, Tax, Impairments, Depreciation and Amortization) or €3 million.The updated Circular introduces a specific section dedicated to the safeguard clause for entities in a consolidated group, referred to as the “equity escape...