As usual, the weeks prior to the summer break are a little bit hectic. The various legislators and tax authorities have been busy, providing some more reading material to those having already devoured their summer best sellers and favourite books.

On 7 May 2018, the Luxembourg tax authorities released a circular introducing some new reporting requirements on transactions concluded with related parties located in so-called "non-cooperative jurisdictions" for Luxembourg corporate taxpayers. In addition, almost simultaneously, the Luxembourg tax authorities released the 2017 corporate income tax form which introduces a new requirement to report certain transfer pricing related information. In this issue, we present the new reporting obligations applicable to Luxembourg corporate taxpayers.

On 11 June 2018, the Luxembourg VAT Authorities published Circular n° 765-1 on the VAT deduction right methodology to be used by holding companies. This new Circular provides additional guidelines on the VAT deduction right of partial VAT taxable persons, i.e. taxable persons performing both activities within the scope of VAT and activities out of the scope of VAT (e.g. holding of shares). We explain these guidelines in detail.

On 20 June 2018, the Luxembourg legislator released a bill of law not only implementing the EU Anti-Tax Avoidance Directive, but also including two additional BEPS-related tax law changes aiming at removing potential double non-taxation situations. We provide an overview of the different tax measures, which may still evolve throughout the legislative process.

From a regulatory point of view, on 6 June 2018, a new law on transparency of securities financing transactions was adopted and has been effective since 12 June 2018. It implements the European regulation 2015/2365 on transparency of securities financing transactions and of reuse, with the intent of improving transparency and better regulating transactions including securities lending, repurchase transactions, total return swaps or reuse of financial instruments received under a collateral arrangement. For that purpose, it empowers competent authorities to impose administrative sanctions and other administrative measures on all EU counterparties, such as UCITS and their management companies or alternative investment funds and their managers. We present the new regulations and their consequences.

At a European level, on 25 April 2018, the European Commission issued a Directive proposal amending Directive EU 2017/1132 as regards cross-border conversions, mergers and divisions, as part of the Single Market Strategy for small and medium sized companies. The Directive proposal is meant to facilitate the cross-border mobility of limited liability companies within the EU, introduce protections for the shareholders, the creditors and the employees of the companies and avoid abuses within the EU, including those abuses aimed at obtaining undue tax advantages. We describe and comment on the Directive proposal from both a corporate and a tax point of view.

On 25 May 2018, the Council of the European Union adopted a Directive, generally called "DAC VI", regarding mandatory automatic exchange of tax information in relation to reportable cross-border arrangements. As a result, new reporting requirements will apply from 1 July 2020 and will catch those cross-border arrangements whose first step was implemented as from 25 June 2018. This Directive will now have to be implemented into national law by 31 December 2019. We set out the main outlines of the new reporting requirements with which tax intermediaries and/or taxpayers will need to comply.

On 5 July 2018, the CJEU delivered its judgment in the French case of Marle Participations regarding the question of whether the letting of an immovable property to a subsidiary constitutes direct or indirect involvement in the management of that subsidiary, the effect of which being that the acquisition and holding of shares in that subsidiary are considered economic activities within the meaning of the VAT Directive. By answering affirmatively, the ruling of the CJEU has implications that we describe below.

We hope you enjoy reading our insights.

Download >> ATOZ Insights - July 2018

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