Navigating Fund Structures in Luxembourg: Effective Transfer Pricing Mitigating Tax Audit and Regulatory Risks

Navigating fund structures in Luxembourg involves complex transfer pricing to balance tax compliance, regulatory consistency and economic viability. This article navigates through the transfer pricing aspects in fund asset management industry, examining delegation models where fund managers delegate the portfolio management function, the limitations of certain TP methods, fee retention by (in)dependent ManCos/AIFMs, and the implications of business restructurings under chapter IX of the OECD Guidelines. Leveraging Luxembourg’s regulatory context, proprietary UCITS benchmarking studies and other professional standards offers a robust framework for mitigating tax audit and regulatory risks that are becoming increasingly apparent and it boosts further cooperation between them.