DAC 6 Law Introducing Mandatory Disclosure Rules In Luxembourg Passed

On Saturday 21 March 2020, the Luxembourg Parliament passed a law implementing 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 measures are essentially identical to the draft provisions as proposed by the Luxembourg government and include the amendments proposed by the Finance and Budget Commission of the Parliament, which follow the opinion of the State Council. In particular, the intermediaries that will be subject to legal professional privilege (i.e. for which any reporting obligations to the Luxembourg authorities will be waived) broadly include lawyers1 as initially provided, but also chartered accounts2 and auditors3. Intermediaries that are subject to legal professional privilege will be subject to a notification obligation to any intermediary not subject to legal professional privilege or, where there is no such intermediary, to the taxpayer concerned by the relevant reporting obligations pertaining to a reportable cross-border arrangement. However, they will no longer have to make anonymised reports to the Luxembourg tax authorities containing any reportable cross-border arrangements, as had initially been provided for in the draft bill of law.

For more details on the initial bill of law submitted by the Luxembourg government to the Parliament, please refer to our newsflash Disclosure of cross-border arrangements by intermediaries: DAC 6 implementation in Luxembourg.

In line with the draft bill of law, the new provisions should in principle be applicable as from 1 July 2020, unless postponement of this application date is obtained from the EU Commission in the context the COVID-19 crisis.

Luxembourg law implementing DAC 6

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

Under the new rules, Luxembourg intermediaries and, in certain cases, taxpayers will have to disclose certain information on reportable cross-border arrangements to the Luxembourg tax authorities as from 1 July 2020 within a specified period of time.

Who will be subject to the new reporting obligations?

The reporting obligation first falls to intermediaries. The notion of intermediaries encompasses both what are known as "primary" intermediaries and "secondary" intermediaries.

A "primary" intermediary is any person that designs, markets, organises, makes available for implementation or manages the implementation of a reportable cross-border arrangement, while a "secondary" intermediary is any person that knows, or could be reasonably expected to know, that they have undertaken to provide - directly or by means of other persons - aid, assistance or advice with respect to designing, marketing, organising, making available for implementation or managing the implementation of a reportable cross border arrangement. This definition is therefore quite broad and may encompass tax advisers, lawyers, accountants, domiciliation agents, management companies, banks, etc.

In addition, a Luxembourg intermediary is any person that is resident for tax purposes in Luxembourg, or that has a permanent establishment in...