Key takeaway
If followed by the CJEU, the Opinion would confirm that Luxembourg's exclusion of qualifying SSPEs from the ATAD interest limitation rule is compatible with EU law and would provide welcome certainty for Luxembourg securitisation transactions.
Why this matters
The Opinion supports Luxembourg's long-standing position and rejects the Commission's strict textual reading and closed-list approach.
A key aspect of the Opinion is that SSPEs are considered economically and regulatorily comparable to other exempt financial undertakings.
The AG considers that ATAD must be interpreted consistently with EU primary law, including the principle of equal treatment, even if it appears exhaustive on its face. Treating regulated SSPEs differently from other regulated financial undertakings, i.e. excluding them from the exemption, would not be objectively justified.
Background
Article 4(7) ATAD allows Member States to exclude financial undertakings from the interest limitation rule. Article 2(5) ATAD defines financial undertaking by reference to EU-regulated financial and insurance entities but does not expressly mention SSPEs.
When transposing ATAD in 2018, Luxembourg included SSPEs in the list of financial undertakings for purposes interest deduction limitation rules. Luxembourg's position was based on coherence and equal treatment: SSPEs carry out regulated financial activities and display the same structural features as other exempt financial undertakings.
The Commission took the view that the ATAD list is exhaustive and that only the EU legislator may extend it. After a letter of formal notice in May 2020 and a reasoned opinion in December 2021, the Commission brought infringement proceedings before the CJEU in February 2024.
The AG's reasoning
AG Kokott accepts that a purely textual and structural reading of ATAD supports the Commission's argument: SSPEs are not expressly listed in ATAD.
However, the decisive point is comparability. According to the AG, the interest limitation rule is mainly designed for real-economy businesses, whereas regulated financial undertakings operate differently: borrowed capital, interest flows and specific income categories are part of their ordinary business. SSPEs share these characteristics and have been subject to a dedicated EU regulatory framework since the EU Securitisation Regulation became applicable.
The AG also notes that SSPEs resemble investment funds, which are expressly covered by the ATAD financial-undertaking exemption: both are predominantly externally financed and redistribute income from underlying assets to investors.
Practical implications
The Opinion is directly relevant to SSPEs within the meaning of the EU Securitisation Regulation. It should not be read as an automatic exemption for every Luxembourg securitisation undertaking under the Luxembourg Securitisation Law. Non-SSPE structures should still be assessed separately under the interest deduction limitation rules.
The Opinion is commercially positive for Luxembourg. The final CJEU judgment is still pending, and AG Opinions are not binding, although they are often influential. If the CJEU follows the AG, this would be an important win for Luxembourg's securitisation market.
If you seek further guidance or wish to discuss your specific circumstances, please contact your trusted advisor at Tiberghien or any of the authors of this publication, who are ready to help you navigate these new requirements and optimize your fund structures.
We will continue to monitor developments in this area and keep readers informed.
If you would like to discuss the implications of the Opinion for your structures, please reach out to your usual contact at Tiberghien or any of the authors of this publication.
