It would seem that governments at all levels want to pass legislation before breaking for the summer holidays!

At local level, a draft law introducing the first tax measure announced by the Luxembourg Government at the beginning of this year has already become law and is now effective. This law deals with the temporary favourable individual tax regime applicable to certain gains realised on the sale of real estate assets. The draft law introducing the remaining 2017 tax reform measures has been adopted by the Government and should be published in the coming weeks. Over the month of June, the Luxembourg tax authorities released 3 different circulars to adapt previously released circulars to recent changes in Net Wealth Tax. In  addition, a draft law was presented to Parliament to anticipate an important change to the US-Luxembourg tax treaty. This draft law is expected to have a significant impact on US branch structures. At local level as well, the Luxembourg Parliament has passed some important legislation: on 13 July 2016,the long-awaited law to modernise the Luxembourg law on commercial companies as well as the law which introduces the simplified private limited liability company (société à responsabilité  limitée simplifiée,Sàrl-S),which should give start-ups a boost and on 14 July 2016,the law creating the Reserved Alternative Investment Fund (RAIF),a new investment vehicle meant to close the gap between highly regulated investment vehicles and unregulated AIFs. The Luxembourg legal publication regime for companies and associations has also been reformed. In the alternative investment fund sector, the CSSF (financial sector regulator) addressed the issues of loan origination, as well as loan participation/acquisition by alternative investment funds (AIFs).Last but not least, Luxembourg has now implemented the EU Directive introducing an automatic exchange of information on tax rulings into its national law.

At EU level, the biggest surprise of the past month has definitively been the unanimous agreement reached by EU Member States on the Anti-Tax-Avoidance Directive, also referred to as the anti-BEPS Directive. This agreement, reached after less than 6 months of debate, was quite unexpected given the numerous opposite positions taken by many Member States shortly before the agreement was finally reached. Five anti-BEPS measures will become effective in the EU from 2019.At EU level as well, the European Commission has published an Action Plan aimed at modernising the current EUVAT system to make it simpler, more fraud-proof and business-friendly.

Finally, BEPS remains on the agenda globally, with the preparation of the multilateral instrument (expected to be finalized  by the end of this year),the release of some guidance on the implementation of Country-by-Country reporting by the OECD and on profit splits, a discussion draft on the allocation of profits to permanent establishments and on the design and operation of the group ratio rule under BEPS Action 4, the release of a standardized  IT-format for the exchange on tax rulings under BEPS Action 5 as well as for providing feedback on received Common Reporting Standard information.

We hope you enjoy these insights.

Download >> ATOZ Insights - July 2016

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.