ATAD 2 And Budget Laws Voted In Luxembourg

On 19 December 2019, the Luxembourg Parliament voted both the 2020 Budget law, which terminates all pre-2015 tax rulings as of the end of tax year 2019, and the law implementing the second EU anti-tax avoidance directive (ATAD 2). Both laws will enter into force once published in the Official Journal, and enter into effect on 1 January 2020.

Termination of pre-2015 rulings in the 2020 Budget law

With respect to the 2020 Budget law, as previously explained in our tax flash on Luxembourg Budget 2020, pre-2015 tax rulings will no longer be binding after the end of the tax year 2019. For companies with a tax year diverging from the calendar year, the ruling is no longer binding already for their current tax year. Taxpayers may request a new ruling (valid for five years) under the procedure in place since 1 January 2015.

Stating the obvious, pre-2015 rulings remain binding for the years prior to the 2020 tax year, to the extent applicable law, case law, and underlying facts did not change compared to the situation prevailing at the time the ruling was obtained. Merely rendering those rulings non-binding through the 2020 Budget law normally does not affect the filing position of tax payers previously benefiting from the certainty of a pre-2015 ruling. It does create the opportunity for tax authorities to change their interpretation of applicable tax law in such cases. Taxpayers should, together with their tax advisers, assess whether or not such change seems likely, and furthermore whether it would be worthwhile to seek a new tax ruling.

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