Executive summaryStarting in March 2021, Luxembourg has applied a defensive measure towards countries listed on Appendix I of the European Union (EU) list of non-cooperative jurisdictions for tax purposes (the EU List). Under certain circumstances, the deduction of interest and royalties owed by Luxembourg corporate taxpayers to related enterprises that are corporations established in a jurisdiction that is on Annex I of the EU List is denied, unless the taxpayer proves that the transaction that gives rise to such expenses is used for valid business reasons which reflect economic reality.The Luxembourg Tax Authority has now issued an updated Circular (the...