Luxembourg: U.S. branch denied permanent establishment status, previous ruling nullified (administrative court decision)

The actual situation did not factually match the one initially described by the taxpayer and upon which the ruling was based.

Previous ruling nullified (administrative court decision)

The Luxembourg administrative court of first instance on 29 September 2023 upheld (Tribunal administrative n° 46470) the tax authority’s decision to nullify a tax ruling previously granted to the taxpayer and deny permanent establishment (PE) status to the U.S. branch of a Luxembourg resident company.


The Luxembourg tax authority in 2013 issued a tax ruling confirming that the U.S. branch of the taxpayer had the required substance to qualify as a PE within the meaning of the Luxembourg-U.S. income tax treaty. Nonetheless, the tax authority subsequently declined to honor the ruling on the grounds that the taxpayer no longer satisfied the conditions and limitations specified in the ruling.

The court upheld the tax authority’s determination, finding that the actual situation did not factually match the one initially described by the taxpayer and upon which the ruling was based. In particular, the court noted inconsistencies between the documents provided by the taxpayer and the description of the facts in the ruling, as well as between the documents themselves. The court thus concluded that it was not established unequivocally that the key elements of the transaction corresponded to those described in the ruling request.

Read an October 2023 report prepared by the KPMG member firm in Luxembourg



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