Luxembourg Unveils New Corporate Tax Rulings Process | KPMG | CA

Luxembourg Unveils New Corporate Tax Rulings Process

Luxembourg Unveils New Corporate Tax Rulings Process

Luxembourg has created a new Ruling Commission to consider written ruling requests and confirm the tax treatment of a proposed taxpayer transaction.

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Luxembourg has created a new Ruling Commission to consider written ruling requests and confirm the tax treatment of a proposed taxpayer transaction. The creation of the new Ruling Commission was included in the newly enacted advance tax agreement rules, which are intended to add clarity to the country's tax rulings procedure on specific corporate tax issues and align its tax regime with the current global trend toward increased tax transparency.

New rules

Under the new rules, advance tax agreements will be valid for a five-year period and will be binding on the tax authorities. The rules state that a ruling cannot lead to a tax exemption, reduction or advantage without legal basis.

Corporations that wish to obtain an advance tax agreement now have to pay an administrative fee. However, the current pending rulings are not subject to the new administrative fee.

While Luxembourg has referred to the possibility of a new requirement called the "economic substance requirement" to obtain a ruling, no such prerequisite was in fact incorporated in Luxembourg's tax legislation. As a result, no recent change has been made to the economic substance rules (e.g., the back-to-back financing).

Luxembourg also clarifies that taxpayers now cannot implement the proposed transactions before making the ruling request.

For more information, contact your KPMG adviser.

Disclaimer

Information is current to January 20, 2015.

The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

For more information, contact KPMG's National Tax Centre at 416.777.8500

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