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Luxembourg: Draft legislation introducing side-by-side package; confirmation that Cyprus has qualified Pillar Two IIR

Bill 8795 was filed with the Parliament on July 17, 2026.

july 28, 2026

Bill 8795, which would introduce the OECD’s side-by-side (SbS) package into the Luxembourg Pillar Two law, was filed with the Parliament on July 17, 2026.

  • The SbS package would introduce four new safe harbors and extend the transitional country-by-country (CbC) reporting safe harbor by one year.
  • The bill would also implement OECD administrative guidance published on May 18, 2026, on the application of the transitional undertaxed profits rule (UTPR) safe harbor to multinational enterprise (MNE) groups with 52-53 week fiscal years.

In addition, the tax administration (Administration des contributions directes (ACD)) on June 26, 2026, announced that it considers Cyprus to have a qualified income inclusion rule (IIR) for purposes of the Luxembourg Pillar Two law. The announcement follows a European Commission (EC) FAQ published on May 29, 2026, stating that all EU member states must recognize Cyprus as having a qualified IIR in force. The recognition applies for fiscal years beginning on or after December 31, 2023.


For more information, contact a KPMG tax professional in Luxembourg:

Emilien Lebas | emilien.lebas@kpmg.lu

Sophie Smons | sophie.smons@kpmg.lu

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