Tax Rulings Granted Prior To 2015 No Longer Valid

Today, the 2020 budget draft law was submitted by the Luxembourg Minister of Finance to the Luxembourg Parliament.

One of the tax measures of the 2020 budget draft law aims to limit the period of validity of advanced tax agreements ("ATA") which were granted before the current ATA procedure (the "Current ATA Procedure") was introduced by the law of 19 December 2014 (i.e. tax rulings granted prior to 1 January 2015).

As ATAs granted to taxpayers bind the tax authorities in the tax assessment process, the Luxembourg government wants to ensure legal consistency between the old and the Current ATA Procedure for issuing ATAs.

For that purpose, the foreseen measure is intended to ensure that a maximum period of validity, like the 5-taxation year period referred to in the Current ATA Procedure, also applies to ATAs granted before 1 January 2015. As a result, taxpayers may therefore rely on an ATA issued before 1 January 2015 for the last time in the context of tax returns related to the 2019 taxation year, provided that the ATA complies with the law in force. Taxpayers will no longer be able to rely on ATAs issued before 1 January 2015 for subsequent taxation years. This measure is not retroactive so that the binding effect of...