2021 is already coming to an end and 2022 is just around the corner. Some major events have certainly stamped 2021, such as the continued existence of COVID-19, COP26 and, in the tax world, agreement on Pillars One and Two. From a tax and legal point of view, what happened in 2021 will also frame 2022.

On 13 October 2021, the draft 2022 budget law was presented to the Luxembourg Parliament. It does not include any corporate tax reforms. Only individual tax measures and minor adaptations/corrections of existing tax provisions were proposed. Nonetheless, the Prime Minister announced a property tax reform within the next 12 months. We will describe and explain the draft 2022 budget law measures.

On 5 October 2021, the EU list of non-cooperative jurisdictions for tax purposes was updated. The update is an important step as it directly impacts the scope of application of three different Luxembourg tax measures. We will explain the consequences of this list on the measure denying the corporate income tax deduction of interest and royalty expenses and on disclosure requirements under DAC6.

From an individual tax and social security perspective, since the COVID-19 pandemic persists, the possibility for cross-border workers to work remotely has been extended once again. We will update you in this respect.

On 28 September 2021, more than five years after it was first tabled, the so-called "public Country-by-Country Reporting directive" was finally adopted by the EU Council. This directive requires certain multinationals with revenues of more than EUR 750 million to publicly disclose the corporate income tax that they pay. We will describe and analyse the conditions of application of the public Country-by-Country Reporting directive.

An Agreement on Pillars One and Two to Address the Tax Challenges Arising from the Digitalisation of the Economy and the Detailed Implementation Plan has been approved at OECD level. Pillars One and Two will respectively introduce new taxing rights on MNEs' profits from automated digital services or "consumer facing businesses" and a global minimum effective tax rate of 15%, expected to apply as from 2023. We will describe what it means and involves.

In the Titanium case, the CJEU ruled that a foreign company should not be considered as having a fixed establishment for VAT purposes in a Member State if its activity in that country is limited to the ownership and the exploitation of real estate without having any human resources locally. We will analyse the VAT impacts of this decision for Luxembourg Property companies from an Austrian, German and Dutch perspective.

Finally, we will provide a summary of major corporate law developments in 2021 and 2022 that may affect your business and will help you navigate the legal landscape and plan ahead.

We hope you enjoy reading our insights.

The ATOZ Editorial Team

Download: Insights - November 2021

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.