Luxembourg Administrative Court confirms that an integrated company may separately challenge an investment tax credit decision

The Luxembourg Administrative Court has clarified that, in a tax unity context, an integrated subsidiary may itself lodge a claim against a decision determining its investment tax credit, even where the corporate income tax charge is assessed at the level of the integrating company.

On 9 June 2026, the Luxembourg Administrative Court issued decision No. 53689C on the procedural rights of companies within a Luxembourg fiscal unity.

The case concerned whether an integrated company may challenge the determination of an investment tax credit (bonification d’impôt pour investissement) where the corresponding corporate income tax is effectively assessed at the level of the integrating company.

The Court held that the decision concerning the granting of the investment tax credit constitutes a separate administrative decision under § 235, No. 5 AO (Abgabenordnung), even if it appears in the same document as the corporate income tax assessment.

As a result, the integrated company to which that decision is addressed may file its own claim against it. The fact that the integrated company has no positive corporate income tax charge during the fiscal unity period does not remove its right to act.

This confirms that, under the legal framework applicable to the relevant year, both the integrating company and the integrated company may, in certain circumstances, have procedural standing regarding the same investment tax credit.

Factual background

In a letter dated 23 February 2022 issued under § 205(3) AO, the Luxembourg tax office informed BB, an integrated company, that it intended to depart from BB’s 2017 tax return. The proposed adjustments included the investment tax credit claimed on certain technical costs and insurance expenses.

After receiving BB’s written observations, the tax office issued a 2017 corporate income tax assessment to BB on 16 March 2022. The assessment stated that the taxation differed from the return in line with the proposed adjustments and referred to a separately adjusted investment tax credit.

On 23 May 2022, BB filed a claim with the director of the Luxembourg direct tax authorities against the assessment and the related investment tax credit determination.

In a decision dated 7 December 2022, the director rejected the claim as inadmissible for lack of interest to act, reasoning that BB, as an integrated company within a fiscal unity under Article 164bis of the Luxembourg income tax law, did not have standing. According to the director, only the integrating company, AA, could challenge the amount of the investment tax credit, as the credit was ultimately applied at AA’s level.

The Administrative Tribunal agreed with the director’s position. BB then appealed to the Administrative Court.

Separate nature of the investment tax credit decision

A key aspect of the Court’s reasoning was the legal characterization of the investment tax credit decision.

The Court relied on prior case law holding that a tax assessment can provide the material basis for two legally distinct decisions: one assessing corporate income tax, and another ruling on the taxpayer’s request for an investment tax credit.

The Court confirmed that the investment tax credit is a tax advantage (Steuervergünstigung) granted through a specific administrative decision following a taxpayer request. That decision therefore falls within § 235, No. 5 AO, which covers separate decisions on tax advantages to which the taxpayer is legally entitled if the statutory conditions are met.

This remains the case even where the investment tax credit decision appears in the same written document as the corporate income tax assessment.

As a result, decisions covered by § 235, No. 5 AO may be challenged independently by way of a claim under § 228 AO.

Standing of the integrated company

The central issue was whether BB, as an integrated company, had the right to file the claim itself.

The director argued that BB had no positive corporate income tax liability of its own, since, under the fiscal unity regime, the taxable results of integrated entities are pooled at the level of the integrating company. On that basis, the director considered that BB had no sufficient interest to challenge the determination of the investment tax credit.

The Administrative Court rejected this view.

It explained that § 235 AO must be interpreted together with §§ 231 and 232 AO, which refer to the “Steuerpflichtiger” as the person entitled to bring a claim. The Court then examined whether an integrated company qualifies as such a taxpayer.

Referring to § 97 AO, the Court recalled that a taxpayer is any person who, under tax law, is liable for a tax as tax debtor. It also highlighted that, under § 97(2) AO, the rules applicable to taxpayers apply mutatis mutandis to persons who are personally liable for tax alongside or in place of the main taxpayer.

The Court then emphasized § 114 AO, which provides that, in a fiscal unity, each member of the integrated group is liable for the tax debts of the integrating company or integrating subsidiary, including late-payment interest, costs, and penalties.

On this basis, the Court considered that the integrated company remains a tax debtor for taxes attributable to its own income, even though the principal charge is levied at the level of the integrating entity.

The Court therefore concluded that the integrated company retains the right to file a claim, provided the other legal conditions are met.

No need for a positive tax charge under § 235, No. 5 AO

The Court further distinguished between the rules applicable to claims against tax assessments in the strict sense and those for separate decisions on tax advantages.

Under § 232(1) AO, a claim against a tax assessment generally requires the taxpayer to be aggrieved by the amount of tax assessed or to dispute its liability to tax. In a fiscal unity, this may be problematic for an integrated company whose tax assessment shows no tax charge because taxation is carried out at the level of the integrating company.

However, the Court held that this logic does not apply to a separate decision falling under § 235, No. 5 AO. For such decisions, a positive tax charge is not required for the claim to be admissible.

That distinction was decisive. The Court stressed that, while the integrating company is the entity at whose level the investment tax credit is ultimately imputed, this does not alter the fact that:

• The integrated company generated the entitlement to the investment tax credit through its own investments;
• The integrated company was required to declare that credit to the tax office; and
• The amount of the credit was determined in relation to the integrated company itself.

Only the application of the credit took place at the level of the integrating company.

Coexistence of procedural rights

The Court expressly recognized that, under the applicable framework, both the integrating company and the integrated company may have standing in relation to the same investment tax credit.

In parallel proceedings, the integrating company, AA, had also challenged the tax assessments issued to it, and the director had accepted that AA had an interest in acting with respect to the application of the credit at its level.

The Court nevertheless found that, for the 2017 tax year, nothing in the legislation limited the right to act to only one of these two entities in this specific context.

Outcome

The Administrative Court held that BB’s claim had been wrongly declared inadmissible. It therefore reformed the judgment of the Administrative Tribunal and the director’s decision, declared the claim admissible, and sent the case back to the director for a decision on the merits.

Key take-away

The Administrative Court’s decision of 9 June 2026 confirms that, under the fiscal unity rules applicable to the relevant year, an integrated company may challenge a decision determining its investment tax credit, even if the corresponding corporate income tax is assessed at the level of the integrating company.

The decision is important for two reasons. First, it confirms that a decision on an investment tax credit is legally distinct from the corporate income tax assessment and may therefore be challenged separately under § 235, No. 5 AO. Second, it clarifies that the absence of a positive tax charge in the hands of the integrated company does not, in that context, deprive it of standing to act.

Taxpayers operating within a Luxembourg fiscal unity should therefore carefully identify which entity is the addressee of decisions relating to tax credits or other tax advantages, as both the integrating and integrated entities may, depending on the circumstances, have procedural rights of challenge.