General Members News

ATOZ: Luxembourg Administrative Tribunal rules on the tax treatment of share class redemptions



On 27 January 2023, the Administrative Tribunal ruled on the Luxembourg tax treatment of the redemption of a class of shares by a Luxembourg Company.


The Tribunal decided that the redemption is to be considered as a sale of shares, not as a dividend distribution. However, when the redemption price exceeds the fair market value of the redeemed share class, the excessive amount should be qualified as a hidden dividend distribution (which is, in principle, subject to 15% Luxembourg dividend withholding tax) if the excessive price is not justified by economic reasons.