By Frank van Kuijk, Menno Maat, Sabrina Million, Wesley Audenaerd

A Luxembourg (special) limited partnership (SCS(p)) is transparent for Luxembourg corporate income tax (CIT) and net wealth tax (NWT) purposes, and is therefore not required to file CIT and NWT returns. However, an SCS(p) may be liable for municipal business tax (MBT, levied at a rate of 6.75% in Luxembourg city) if it conducts a business in Luxembourg.

An SCS(p) also becomes subject to MBT if its general partner holds an interest of 5% of more in the SCS(p) (i.e., the SCS(p) is “tainted”). An SCS(p) which is liable for MBT must file a tax return to declare its taxable income and how this income should be allocated to its partners (Form 300).