On 25 March 2026, the Luxembourg Administrative Tribunal ruled that a repayment of share premium without a simultaneous reduction of share capital constitutes taxable income from capital under Article 97 (1) No. 1 of the Luxembourg Income Tax Law which is, in principle, subject to Luxembourg withholding tax ("the Decision").
However, the Decision is flawed as it prioritises legal form over economic substance and has already been appealed to the Administrative Court.
In this ATOZ Report, Tax Partner, Oliver R. Hoor, and Chief Knowledge Officer, Marie Bentley, analyse the Decision and provide a comprehensive technical framework for the tax treatment of share premium and other capital repayments under Luxembourg law.