Retroactive Effect of Mergers under Luxembourg Tax Law: Is Time Travel Actually Possible?

In this note, the authors discuss the circumstances in which a merger between domestic companies in Luxembourg might be given retroactive effect. To the extent this occurs, operations carried out by the absorbed company during the intervening period may be taken into account, for tax purposes, at the level of the absorbing company. Expenses incurred or losses realized by the absorbed companies may, therefore, be deducted from the taxable profit of the acquiring company.