On 28 March 2023, the government presented Bill of Law 8186 (“Bill”), which provides a set of amendments to the General Tax Law (Abgabenordnung, AO) dated 22 May 1931 and introduces new procedural aspects applicable to taxpayers. The Bill also introduces new bilateral and multilateral advance pricing agreement procedures, together with the possibility to issue, withdraw or amend a tax assessment further to a mutual agreement procedure or an arbitration decision. Lastly, the Bill proposes a transfer pricing documentation requirement for transactions between associated enterprises, while further details regarding the scope, exact content and magnitude will be unveiled soon in a coming grand ducal decree.

On 22 December 2021, the European Commission released its proposal for a directive setting the rules to prevent the misuse of shell undertakings for tax purposes (ATAD III or unshell or Proposal) amending Directive 2011/16/EU on administrative cooperation in the field of taxation. ATAD III is subject to negotiation among all 27 member states and requires unanimous agreement for adoption.

In March 2021, the EU approved new reporting rules in a directive known as DAC7. The directive will require the operators of online platforms for the sale of goods and certain services, to collect, verify and share data on their sellers and their transactions concluded on the online platform. EU member states have until 31 December 2022 to implement DAC7 into national law. Certain platform operators will become a reporting platform and will need to start collecting and verifying data points in compliance with the DAC7 reporting requirements. The collected data points must be reported to the tax authorities of the relevant EU member state annually.

Welcome to our first quarter issue of the Private Wealth Newsletter. Our featured insight for this issue is a discussion of the passage of the Corporate Transparency Act by the United States to introduce federally-mandated beneficial ownership reporting obligations for US corporations and limited liability companies. We also include insights…

In brief On 8 January 2021, the Luxembourg tax authorities released Circular L.I.R. No. 168bis/1 (“Circular”) providing guidance on the application of the interest deduction limitation rule introduced by the Law of 21 December 2018 (“Law”) implementing the Anti-Tax Avoidance Directive (EU) 2016/1164 of 12 July 2016 (ATAD). According to…

On 28 January 2021, the Luxembourg Parliament (Chambre des Députés) adopted1 bill of law 7547 on the non-deductibility of interest and royalty payments made to related parties in non-cooperative jurisdictions (“Law”).

As explained in our tax alert dated 20 April 2020, the new provision amends Article 168 of the Luxembourg Income Tax Law (LITL), which lists non-deductible expenses for taxpayers subject to corporate income tax. The Law therefore completes the scope of non-deductible expenses by adding a rule of non-deductibility of interest or royalty expenses paid by a Luxembourg taxpayer to a related company established in a country or territory appearing on the list of the EU as a non-cooperative tax jurisdiction.

On 14 October 2020, Luxembourg announced new provisions with respect to incentive for highly skilled and qualified workers (“Impatriate Regime”) as part of the 2021 budget bill (“Law”).1

The Impatriate Regime was introduced back in 20112 and was further amended by several circulars, including the most recent Circular LIR No. 95/2 dated 27 January 2014 (“Circular”) which have been repealed in the meantime. The government has now decided to codify the Impatriate Regime under Article 115(13) b. of the Luxembourg income tax law (LITL) and to introduce some limited changes.

The aim of Article 115(13) b. of the LITL remains close to the original objective of the Circular, which was to further enhance the competitiveness of Luxembourg by enabling Luxembourg employers to hire new talent from abroad. The changes introduced by the Law should further simplify the procedure, strengthening the clear intention of Luxembourg to remain attractive from an economic perspective.

Below we describe the regime that will be applicable as from 1 January 2021 while highlighting the main changes compared to the former rules.

In brief Luxembourg Prime Minister, Mr. Bettel, announced on 13 October 2020 some new tax measures during the state of the nation speech. You may recall that a structural tax reform to take place in 2021 was announced by the Minister of Finance, Mr. Gramegna, in July 2019. The Covid-19 outbreak has…

On 14 May 2020, the European Court of Justice (ECJ) issued its decision on case (C-749/18) further to a request for a preliminary ruling by the Luxembourg Administrative Court on 30 November 2018. The ECJ ruled that the strict distinction made by the Luxembourg tax authorities between the vertical and horizontal tax unity regime is contrary to the freedom of establishment set forth in articles 49 and 54 of the Treaty on the Functioning of the European Union (TFEU).

As a result, an EU non-integrating parent entity (i.e., share capital company or permanent establishment) should be able to combine horizontal and vertical tax unity without terminating the pre-existing fiscal unity nor triggering any negative tax consequences resulting from such a termination. Indeed, under Luxembourg current tax consolidation rule, the end of tax unity group before the end of the five years minimum period entails a retroactive tax assessment of each entity on a stand-alone basis.

On Saturday 21 March 2020, the Luxembourg Parliament passed the law implementing the Council Directive (EU) 2018/822 of 25 May 2018 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements (the DAC 6 Law). The DAC 6 Law…