Payments made to Luxembourg as from FY 2015 | KPMG | BE

Payments made to Luxembourg as from FY 2015

Payments made to Luxembourg as from FY 2015

Following their 29-30 October 2015 meeting, the Global Forum on Transparency and Exchange of Information for Tax Purposes no longer considers Luxembourg, Cyprus, and the Seychelles as non-compliant with the OECD standard for the exchange of information

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Following their 29-30 October 2015 meeting, the Global Forum on Transparency and Exchange of Information for Tax Purposes no longer considers Luxembourg, Cyprus, and the Seychelles as non-compliant with the OECD standard for the exchange of information. This implies that payments made to Luxembourg, Cyprus, and the Seychelles during the current taxable period should no longer be reported. By current taxable period it is meant the assessment year 2016, i.e. financial year ending per 31 December 2015 or financial year ending in 2016 for companies with a financial year that does not follow the calendar year. 

 

Guatemala and Trinidad & Tobago have been rated non-compliant without having undergone a phase 2 review as elements critical to ensuring effective exchange of information in its legal and regulatory framework didn’t remain in place for more than 2 years after their phase 1 review. Payments to those jurisdictions made during taxable periods beginning on or after 1 November 2015 (to be confirmed) must therefore be reported in form 275F to be joined to the corporate income tax return of (in most cases) financial year 2016/assessment year 2017. 

 

Since January 1, 2010, corporate tax payers must report all direct and indirect payments made to tax havens (art. 307 BITC 1992). As tax havens are considered: 

  1. States mentioned on a list of States with or without a low level of taxation, which means having a nominal corporate tax rate below 10% (art. 179 RD/BITC 1992) – “Belgian” blacklist; 
  2. States which, during the entire taxable period in which the payment is made, are considered by the Global Forum on Transparency and Exchange of Information for Tax Purposes as not applying the OECD standard for the exchange of information “effectively or substantially“ – “OECD” blacklist. 

Regarding the second category, in November 2013 the OECD published the first results of its Peer Review. Luxembourg, Cyprus, the Seychelles and the British Virgin Islands (BVI) were considered to be non-compliant with the OECD standard. Payments made to those jurisdictions during taxable periods beginning on or after 1 December 2013 (in most cases financial year 2014/assessment year 2015) had to be reported. 

 

In a recent circular letter (see our previous e-tax flash), the tax authorities stated that the non-reporting of payments to Luxembourg, Cyprus and the BVI does not automatically result in the non-deductibility of those payments. 

 

The BVI were no longer considered non-compliant in July 2015, but are still on the “Belgian” blacklist and therefore payments to the BVI still have to be reported. 

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