Fiscal unity: Organschaft in Luxembourg
Consolidate a group fiscally and offset losses between entities
Fiscal unity allows forming a consolidated tax group: the results (profits and losses) of subsidiaries are aggregated at the parent level. A powerful tool to optimize a group's tax burden when results are heterogeneous.
Key metrics
Our tax experts help you structure your optimization in strict compliance with Luxembourg law and OECD/BEPS standards.
Talk to a tax expertKey advantages
- Immediate offset of a subsidiary's losses against group profits
- Optimization of CIT at consolidated level
- Administrative simplification (single integrated tax return)
- Neutralization of intra-group transactions
- Compatible with SOPARFI and other regimes
- Includes indirect subsidiaries (via vertical integration)
Qualifying conditions
- Direct or indirect participation of at least 95%
- Integrating company resident in Luxembourg
- Integrated subsidiaries fully taxable in Luxembourg
- Irrevocable commitment for at least 5 financial years
- Formal request to the tax authority before the financial year starts
- Financial years aligned between parent and subsidiaries
Who this regime is for
Group with profitable operating subsidiary and loss-making R&D subsidiary
A Luxembourg group owns two 100% subsidiaries: subsidiary A generates EUR 3M profit, subsidiary B (R&D) shows EUR 1.5M losses.
CIT on EUR 3M = EUR 748,200
CIT on EUR 1.5M = EUR 374,100
EUR 374,100
Fiscal integration allows immediate use of R&D subsidiary losses to reduce the group's taxable base. Without this mechanism, losses would need to be carried forward and used later by subsidiary B itself.
Legal basis and OECD compliance
Compliance and anti-abuse
Luxembourg's fiscal integration aligns with CJEU case law (X Holding, SCA Group Holding cases) and respects intra-EU non-discrimination principles. ATAD rules on interest deductibility limitation apply at the integrated group level.
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Frequently asked questions
Can a foreign subsidiary be included in integration?
EU/EEA resident subsidiaries may be integrated horizontally (under strict conditions). Non-EEA subsidiaries are not eligible, but their losses may sometimes be considered via Marks & Spencer case law (final losses).
What happens with an early exit before 5 years?
An early exit (sale of subsidiary, loss of 95%) triggers retroactive challenge of integration. Tax savings must be repaid with late interest.
How are intra-group distributions handled?
Distributions between integrated companies are tax-neutralized. They generate no taxation or withholding tax, facilitating cash upstream within the group.
Is integration compatible with the SOPARFI regime?
Yes, fully. A SOPARFI can be the integrating company. Qualifying participations continue to benefit from the exemption regime, while other income is consolidated at group level.
Other optimization regimes
Explore the other Luxembourg tax mechanisms available.
SOPARFI
Most usedArt. 166 LIRThe most widely used Luxembourg holding vehicle in Europe
IP Box
Art. 50ter LIREffective rate of about 5% on intellectual property income
Tax treaties
OECD model and bilateral agreementsOver 80 treaties to avoid double taxation
RAIF
Law of 23 July 2016Fast and flexible structuring for well-informed investors
Tax ruling
§ 29a AO (procedure)Fully secure the tax treatment of your operations
Optimize your tax structure
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