Advance Tax Agreement Luxembourg

Luxembourg`s Finance Act for 2020, adopted and published in the Official Journal, contains a new provision that limits the validity of advance tax decisions (ASAs) adopted by Luxembourg`s direct tax authorities before 1 January 2015 until the end of the 2019 financial year. Taxpayers cannot apply for a new tax advance to avoid, for example, the payment of the levy under Article 29 bis of the Eu Taxation Procedure Act for Decisions or Exchanges of Rights under the Administrative Cooperation Directive, bearing in mind that the “old” AT are also affected by an exchange procedure. It is likely that the vast majority of asS-regulated situations will simply continue to apply, since the ATA`s objective was simply to confirm the application of the law and provide a tax guarantee to the taxpayer. In the absence of legislative changes, the tax analysis should remain unchanged from the outset. However, in some situations, the tax authorities have found that the situations covered by asSAs may be considered abusive. Until now, the tax judge has consistently rejected this approach, as the tax authorities were bound by previous judgments and could only deviate from it in the future if they revoked the ATA. The new law, if passed, could allow the authorities to reconsider for the future situations that they believe do not conform to the prohibition of abuse of rights. The bill`s official commentary explains that the measure was necessary to achieve legal “coherence” between the prior agreements granted before January 1, 2015 and those in force under the revised procedures applicable to and after that date. These revised procedures are based on Article 29a of the General Tax Act of May 22, 1931, as amended, at the same time as the Grand Ducal Regulation of December 23, 2014, which established the function of tax administration commission for prior confirmations. The commentary indicates that these tax treaties can still be applied for fiscal year 2019 before 2015, provided the agreement remains in line with current law. The Luxembourg Finance Act published on 14th October provides that all pre-price agreements and other advance tax rulings (early tax decisions) issued by the Luxembourg tax authorities before 1 January 2015 are intended for the Luxembourg tax authorities at the end of 2019 or earlier in 2019 (i.e. the Luxembourg tax authorities).