How Tax Compliance In Luxembourg Is Changing

With global accountability the 'new normal', it's more important than ever to understand your tax compliance obligations in Luxembourg.

Like many other governments around the world, Luxembourg lawmakers put several tax compliance and regulatory aspects together into a pot, covered it and let it simmer over a low heat until it reached a point that it was BEPS and OECD compliant, yet still very attractive for business.

Balancing appropriate tax accountability levels while remaining a magnet for international business is no mean feat, and the latest changes have not been without consequence for those operating in Luxembourg. That's where working with local accounting and tax experts - such as TMF Luxembourg - is so important. We provide solutions that help to make sure your ventures continue to succeed, while maintaining a clean bill of tax health.

So how is the Luxembourg tax landscape changing? And what do you need to do to be compliant?

Personal tax liability for company directors and managers

The responsibility and liability of a company's Director or Manager has changed in several key ways. They now bear the risk of being held personally liable for the payment of a tax liability, and non-compliance of the administered entity in certain circumstances – even for issues that began prior to the start of their mandate and after cessation of activity regarding issues that occurred during the mandate.

Liability can also arise from breaches of any type of law or regulation:

individual (or collective) contractual liability to the company for mismanagement (Art 59, al 1 of the 1915 Companies Law) personal and joint liability to the entity or third parties for breaches of the 1915 Companies Law or the articles (Art 59, al2) or VAT law Art 67 – 1 and 2 quasi tortious liability (Art. 1382sq of the civil code) which generally applies if a person commits a fault, whether by act or omission that causes a loss to the entity or a third party. High degree of tax scrutiny

Luxembourg is increasingly a country of focus for global tax authorities when it comes to compliance and the arm's length principle (ALP). The Grand Duchy is making many adjustments in its tax landscape as a result, and businesses must in turn follow suit by adhering to:

the mandatory e-filing procedure and platform for corporate income tax (CIT) returns and Country-by-Country (CbC) notifications and reports the refreshed VAT e-filing platform changing transfer pricing documentation...