Luxembourg: New Bill Implementing DAC6

On 8 August 2019, the Luxembourg Government tabled a new Bill of Law N° 7465 (the "Bill") before the Luxembourg Parliament (Chambre des députés) implementing the so-called "DAC6" (EU Directive 2018/822 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements) into Luxembourg domestic law.

DAC6 requires EU "intermediaries" (or taxpayers) to report cross-border arrangements that strongly present a risk of tax avoidance or abuse.

Please find below a summary of the main provisions of the Bill which generally adopts the wording of DAC6.

  • WHAT must be reported?
  • The following arrangement are considered as Reportable Arrangements:

    1. "Cross-Border Arrangements" (i.e. arrangements involving either more than one EU member state or an EU member state and a third country);
    2. Arrangements that meet at least one of the "hallmarks" listed in the Bill. Hallmarks reflect characteristics of an arrangement identified as potentially indicative of aggressive tax planning. Some of them are subject to a gateway criterion, known as the "Main Benefit Test".
  • The Bill reproduces the hallmarks listed in DAC6 without any add-ons or amendments. However, at the time DAC6 was released, those hallmarks already raised many concerns as they are wide in scope and thus leave plenty of room for debate.
  • WHO has to report?

    1. Intermediaries (e.g. tax consultants or service providers such as banks, auditors, PSF, accountants) who design or provide, directly or indirectly, assistance with respect to Reportable Arrangements ("Intermediaries") or;
    2. the taxpayer(s) if there are no Intermediaries who are obliged to report (e.g. in the case the Intermediary asserts professional secrecy or in the case the taxpayer designs and implements a scheme in-house).

      The definition is wide for, not only does it cover Intermediaries who provide tax advice but it also covers Intermediaries that know, or who are reasonably expected to know that, they are providing assistance with respect to a Reportable Arrangement.

    3. Some Intermediaries are however exempted from the reporting obligations:
  • - The Bill exempts lawyers that are subject to professional secrecy, as set out in Article 35 of the Law of 10 August 1991 on the profession of lawyer 1 (the "Lawyers"), from reporting obligations when such reporting would be in breach of the attorney-client privilege. However, when they are acting outside the boundaries of their profession, the regular reporting obligations remain applicable.
  • Under DAC6, an EU member state may give an Intermediary the right to waive its reporting obligations where they would breach the legal professional privilege under the national law of that Member State. Unsurprisingly, the Bill took the option offered by DAC6 to exempt Lawyers from the reporting obligations.
  • Despite this exception, the Lawyers will still be subject to an obligation to report general information in relation to reportable cross-border arrangements (while keeping the identities of the taxpayers concerned unidentifiable) in order to best reconcile the requirements of the legal professional privilege with the need to obtain timely information on the reportable cross-border arrangements. In addition, the Lawyers must notify without delay any other Intermediary (or, if there is no such Intermediary, the relevant taxpayer) of its reporting obligations.
  • According to the Bill, and in line with the objectives of DAC6, in situations where the exemption noted above is applicable, and where there is no other intermediary subject to the reporting obligations, those shall be the responsibility of the taxpayer concerned by the reportable cross-border arrangement.
  • - Intermediaries proving that a Reportable Arrangement was already disclosed by another Intermediary.
  • WHEN does a Reportable Arrangement have to be reported?
  • As from 1 July 2020, Reportable Arrangements must be reported to the tax authorities within 30 days beginning on the day after which (i) the reportable cross-border arrangement is "made available" for implementation; or (ii) the reportable cross-border arrangement is "ready" for implementation, or (iii) the "first step" in the implementation of the reportable cross-border arrangement has been made.
  • Reportable Arrangements, which were/will be initiated between 25 June 2018 and 30 June 2020 must be reported before 31 August 2020.
  • WHAT taxes are covered?
  • Income tax, corporate tax, capital gains tax, registration duties, local taxes, real estate taxes, and wealth or inheritance taxes are all within the scope of the Bill. However, indirect taxes such as VAT, customs and excise duties are not.
  • WHAT are the penalties in case of infringements?
  • In line with the fines applicable under FATCA2 and CRS3 laws, the Bill introduces penalties of up to EUR 250,000 for Intermediaries and taxpayers concerned who do not comply with their obligations to report or notify the Luxembourg tax authorities. The concerned intermediary or taxpayer may appeal against a fine.
  • WHEN does the Bill enter into force?
  • The Bill will enter into force once it has been approved by the Luxembourg Parliament. This will be achieved before the end of the year. Meanwhile, it will go through the Luxembourg legislative process, i.e., be subject to different opinions of concerned agencies (professional bodies), but especially to the opinion of the Council of State. It may thus be amended before Parliament's final vote.

The scope of DAC6 is very wide, giving rise to many grey areas and practical issues. Although the Bill provides some clarifications, there are still many outstanding questions regarding the scope and the detailed application of the mandatory reporting obligations. It is hoped that further details will be introduced during the legislative process.

Footnotes

1. According to the law of 10 August 1991 on the profession of lawyer, the lawyer is responsible for keeping secret information that is acquired by him or her, except in cases where he or she is called before a judge to testify and in cases where the law obliges them to disclose the information.

2. Law of 18 December 2015, as amended.

3. Law of 23 December 2016, as amended.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions