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Luxembourg Tax alerts
Tax alert is issued on a regular basis highlighting the latest key tax developments in Luxembourg.
LTA issues a new Mutual Agreement Procedure circular
17 March 2021
On 11 March 2021, the Luxembourg tax administration (LTA) issued a new circular regarding the implementation terms of the Mutual Agreement Procedure (MAP) under the bilateral tax treaties concluded by Luxembourg, and in line with article 25 of the OECD Model Tax Convention (or analogous tax convention stipulations).
11 March 2021
Personal income tax - Since the COVID-19 crisis began in March 2020, many Luxembourg non-resident cross-border employees have worked from their homes in Belgium, Germany or France.
Luxembourg tax authorities issue circular regarding the prime participative
16 February 2021
The Luxembourg tax authorities issued guidance regarding the new remuneration model, the prime participative (or profit-sharing bonus) on 11 February 2021 in a circular (circular L.I.R. n°115/12 dated 11 February 2021).
Deductions denied for amounts due to certain related parties as from 1 March 2021
29 January 2021
On 28 January 2021, the Luxembourg legislature adopted rules disallowing tax deductions for interest and royalties due to related entities established in a country or territory included in the EU list of non-cooperative jurisdictions for tax purposes (EU list). These rules will be effective as from 1 March 2021.
Tax authorities release guidance on interest limitation rules
13 January 2021
The Luxembourg tax authorities issued guidance clarifying certain aspects of the interest expense deduction limitation rules in article 168bis of the Income Tax Law.
28 December 2020
On 19 December 2020, Luxembourg’s 2021 budget law was adopted by the Chamber of Deputies and it was published in the Official Journal on 23 December 2020.
23 December 2020
Since the start of the COVID-19 crisis in March 2020, many Luxembourg non-resident cross-border employees have worked from Home in Belgium, Germany or France.
Tax return filing extensions are welcome announcement in the current context
22 December 2020
On 21 December 2020, following Prime Minister Xavier Bettel’s speech in the context of the current COVID-19 situation, the Luxembourg Minister of Finance published a statement (in French only) extending the deadlines for the 2019 and 2020 individual and corporate tax returns.
3 December 2020
On 1 December 2020, the Luxembourg tax authorities released a Circular aiming to clarify the effects of this decision. The Circular foresees that the national provisions transposing the PSD will no longer apply to companies incorporated in Gibraltar as from 1 January 2021.
13 November 2020
On 6 November 2020, Luxembourg and the Russian Federation signed a new amendment to the Luxembourg – Russia Income and Capital Tax Treaty in Moscow as amended.
Luxembourg draft 2021 budget law
16 October 2020
On 14 October 2019, Luxembourg’s Finance Minister presented the measures in connection with the 2021 budget law to the Chamber of Deputies.
Changes to EU blacklist affecting Luxembourg entities’ reporting requirements and tax measures
8 October 2020
On 6 October 2020, for the second time this year, the European Council revised the list of non-cooperative jurisdictions for tax purposes, aiming to improve tax good governance.
26 August 2020
Since the start of the COVID-19 crisis in March 2020, many Luxembourg nonresident cross-border employees have worked from their homes in Belgium, Germany or France.
18 August 2020
Since March 2020, Luxembourg nonresident cross-border workers, confronted with new ways of working, have had no other choice but to work from their homes. From mid-March 2020, EU Member States shared the view that the increased use of teleworking due to the COVID-19 crisis would not be taken into account when determining the applicable social security legislation.
31 July 2020
Luxembourg transposed Directive 2020/876 of 24 June 2020 by the law dated 24 July 2020, whereby it introduced a deferral of DAC6 reporting obligations by six months. Following this amendment, the Luxembourg tax authorities have provided some clarification on the deferral by updating their website dedicated to DAC6.
5 June 2020
On 4 June 2020, Luxembourg's Ministry of Finance confirmed that the proposal for a European Commission directive aimed at postponing certain deadlines for declaration and exchange of information in tax matters due to the COVID-19 pandemic has passed the final stages of approval, although this is yet to be formally published.
Decision to defer DAC6 reporting obligations by six months and relevant clarifications published
4 June 2020
Following a recent compromise, Member States may exercise the option to defer the DAC6 reporting deadlines by six months.
COVID-19: Mitigation measures within the EU Banking sector
9 April 2020
Dividend distributions, share buy-backs, and variable remuneration
Recommendations from the European Central Bank
On 27 March 2020, the European Central Bank (ECB) adopted a Recommendation on dividend distributions in response to COVID-19 (the “Recommendation”).
2 April 2020
Following the recent publication of the Grand Ducal Regulation that authorizes the remote holding of AGMs and other management meetings (alert to be found here), the Luxembourg authorities released draft bill n°7541 on Friday 27 March 2020 to grant the possibility to prorogue or postpone the deposit and publication of annual accounts in derogation to the applicable rules.
2 April 2020
On 13 March 2020, in response to the current COVID-19 emergency, the Luxembourg government introduced a draft law (Draft Law n. 7532) seeking to provide an aid scheme for companies in temporary financial difficulty.
Luxembourg introduces draft law as defensive measures in relation to the EU black list
2 April 2020
As from tax year 2018, the Luxembourg tax authorities have imposed specific reporting requirements in relation to transactions of Luxembourg companies with related enterprises located in jurisdictions that are included on the list of non-cooperative jurisdictions for tax purposes (the EU black list).
Grand Ducal Regulation of 20 March 2020: Measures concerning company meetings
24 March 2020
On Friday 20 March 2020, a Grand Ducal Regulation dealing with the introduction of special rules and measures governing the organization of shareholder, Board of Directors, or other supervisory and management body meetings was issued, published in the Official Journal of the Grand Duchy of Luxembourg, and immediately implemented into Luxembourg law.
DAC 6 law voted by the Luxembourg parliament
24 March 2020
On Saturday 21 March, the Chamber of Deputies organized an exceptional session where, among others, the draft law transposing EU Directive 2018/822, commonly referred to as DAC 6 (or the “tax intermediaries directive”) was voted into Luxembourg law.
Luxembourg implements new tax measures in response to the COVID 19 crisis
19 March 2020
Following Prime Minister Xavier Bettel’s speech of 17 March 2020 regarding the COVID-19 crisis, the Luxembourg government will implement a series of new measures for direct and indirect taxes.
Luxembourg Circular on Controlled Foreign Company published
10 March 2020
On 4 March 2020, the Luxembourg tax authorities issued a Circular n°164ter/1 (“Circular”) clarifying article 164ter of the Luxembourg Income tax law (“LITL”) on Controlled Foreign Company (“CFC”) rules. This provision was introduced by the law dated 21 December 2018 whose main purpose was to implement ATAD1 into Luxembourg domestic tax law.
Changes to EU black list affect reporting requirements for Luxembourg entities
19 February 2020
On 18 February 2020, the European Council revised the list of non-cooperative jurisdictions for tax purposes, whose objective is to improve tax good governance. The Council has included four more jurisdictions—Cayman Islands, Palau, Panama, and Seychelles—in annex I (“black list”), in addition to the eight jurisdictions already listed.
OECD releases report on transfer pricing of financial transactions
13 February 2020
The Organisation for Economic Co-operation and Development (OECD) on 11 February released final guidance on the transfer pricing aspects of financial transactions. The long-awaited release marks the first time the OECD transfer pricing guidelines (TPG) will be updated to include such guidance.
20 January 2020
The provisions covering exit taxation apply to fiscal years starting on or after 1 January 2020.
Law implementing ATAD 2 entered into force
6 January 2020
The Luxembourg law implementing the hybrid mismatch measures in ATAD 2 (2017/952 EU Anti-Tax Avoidance Directive) into domestic law was approved by the parliament and published on 23 December 2019.
3 January 2020
Luxembourg’s 2020 budget law, voted and published in the Official Journal, includes a new provision limiting the validity period of advance tax decisions (ATAs) issued by the Luxembourg direct tax authorities before 1 January 2015 to the end of fiscal year 2019.
Amendment to new Luxembourg-France tax treaty expected to apply from 1 January 2020
21 October 2019
On 10 October 2019, Luxembourg’s Minister of Finance and the French Minister of Economy and Finance signed an amendment to the new Luxembourg-France Tax Treaty, which was finalized on 20 March 2018 and which has since been ratified by both states.
12 August 2019
On 8 August 2019, the draft law implementing the EU directive 2018/822, commonly referred to as DAC 6, was introduced to the Luxembourg parliament. The parliament will now debate, possibly amend and ultimately vote on the proposed text.
Luxembourg releases draft law implementing ATAD 2 rules on hybrid mismatch arrangements
9 August 2019
On 8 August 2019, Luxembourg published the draft law that would implement hybrid mismatch measures of the 2017/952 EU Anti-Tax Avoidance Directive (ATAD 2) into Luxembourg domestic law.
Luxembourg tax authorities release Circular L.I.R. n° 50ter/1 regarding new IP regime
On 28 June 2019, the Luxembourg tax authorities released a circular relating to the new IP regime. The new regime is applicable as from the 2018 fiscal year.
Luxembourg 2019 budget in force as of 1 May 2019, MLI in force as of 1 August 2019
24 April 2019
April 2019 was a fruitful month in terms of Luxembourg tax laws. Two important laws are now ready to enter into force – namely, the ratified MLI and the 2019 budget law.
The European Banking Authority (EBA) published its report on high earners for 2017
21 March 2019
The EBA observes a slight increase of high earners in EU banks for 2017
7 March 2019
On 5 March 2019, Luxembourg’s Finance Minister, Pierre Gramegna presented the draft 2019 Budget Law, together with the draft law on multiannual financial planning, for the 2019-2022 period to the Chamber of Deputies.
MLI – expected entry into force in Luxembourg
20 February 2019
On 7 June 2017, Luxembourg signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI), along with representatives of 67 other jurisdictions.
About your 2018 Luxembourg tax return and 2019 tax card
28 January 2019
The tax authorities announced recently that the 2018 tax return forms will be available for download on their website as of 4 February 2019.
Married couples as well as non-resident taxpayers will need to consider for the first time the tax measures introduced by the 2017 tax reform.
23 January 2019
On 18 January 2019 the Luxembourg government published the guidelines for UK nationals in case of a Brexit agreement or no agreement concluded between the UK government and the European Union.
Luxembourg law transposing ATAD 1 voted and published in the Memorial
19 December 2018
On 18 December 2018, the Luxembourg Parliament voted on the transposition into Luxembourg law of the EU Anti-Tax Avoidance Directive of 12 July 2016 (ATAD 1).
14 December 2018
Impacts on the Luxembourg companies employing French tax residents.
Luxembourg coalition agreement: proposal of tax measures
6 December 2018
The coalition agreement between the three parties in the new government covers among others the tax measures envisaged by the new government for the five years to come (until 2023).
Four-year investigation finds no impermissible state aid was granted by tax rulings
21 September 2018
Following a four-year investigation, the European Commission concluded on 19 September 2018 that Luxembourg did not provide any impermissible state aid in the McDonald’s case.
Luxembourg Circular on virtual currencies
31 July 2018
On 26 July, the Luxembourg Tax Authorities published a new Circular on the topic of virtual currencies, providing useful clarifications on the tax treatment of income generated through virtual currencies, particularly in the scope of their creation or disposal.
CbC Reporting Newsletter - Amended list of CbC jurisdictions released by Luxembourg authorities
24 July 2018
On 10 July 2018, the list of jurisdictions subject to country-by-country (CbC) reporting was updated with an amended Grand-Ducal Regulation.
Luxembourg draft law ratifying the MLI published
6 July 2018
On 7 June 2017, under the framework of the OECD BEPS project, Luxembourg signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI), along with representatives of 67 other jurisdictions.
Luxembourg releases bill implementing anti-tax avoidance directive
20 June 2018
On 20 June 2018, the Luxembourg bill (the Bill) implementing the EU Anti-Tax Avoidance Directive dated 12 July 2016 (ATAD 1) was published. The ATAD 1 reflects some of the actions in the OECD’s base erosion and profit shifting (BEPS) project.
Defensive measures for EU list of non-cooperative countries and territories
9 May 2018
Last December, the Council of the European Union approved and published conclusions containing the European Union list of non-cooperative jurisdictions. The listed jurisdictions have been considered as not yet having provided effective actions in response to the European Union concerns.
Impact of revised tax treaty signed by France and Luxembourg on real estate investment structures
23 April 2018
On 20 March 2018, the governments of Luxembourg and France signed a new double tax treaty and its additional protocol (hereinafter together referred to as “the new DTT”) to replace the current agreement between the two countries.
VAT group: draft bill lodged with the Parliament
17 April 2018
On 16 April 2018 , the Luxembourg government has lodged with the Parliament the draft bill introducing the VAT group. Long awaited, this regime aims to avoid VAT on transactions between persons closely bound by financial, economic, and organizational links.
New tax treaty signed with France
23 March 2018
On 20 March 2018, the governments of Luxembourg and France signed a new double tax treaty and its additional protocol (hereinafter together referred to as “the new DTT”) to replace the 60-year-old agreement between the two countries. The text of the new DTT is currently only available in French.
23 March 2018
On 22 March 2018, the Luxembourg Parliament passed a law replacing the IP box regime that was abolished in 2016. The law voted is in line with the provisions of draft law n°7163 issued in August 2017.
New tax treaty between Luxembourg and France: 29 days rule
19 March 2018
On Friday 16 March 2018, the Luxembourg Ministry of Finance announced that a new double tax treaty with France will be signed in the upcoming days that will modernize the 60-year-old agreement between the two countries.
8 March 2018
List of CbC jurisdictions released by Luxembourg authorities
Tax card 2018 - Practical modalities for married taxpayers
23 January 2018
27 December 2017
Luxembourg’s 2018 budget law was approved by the parliament and officially published on 21 December 2017, with the tax measures applying as from 1 January 2018.
27 December 2017
Luxembourg’s 2018 budget law was approved by the parliament and officially published on 21 December 2017, with the tax measures applying as from 1 January 2018.
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