Luxembourg: Legislation on APAs and MAP procedures, transfer pricing documentation requirements, general tax procedures

Provisions are not final and might be subject to change.

Provisions are not final and might be subject to change.

Bill no. 8186 would introduce changes to advance pricing agreement (APA) procedures and mutual agreement procedures (MAP), transfer pricing documentation requirements, and general tax-related procedures.

APA procedures and MAP

A new procedure would be introduced for bilateral and multilateral APAs.

  • APAs would need to be presented in writing to the Director of the Luxembourg Direct Tax Authorities (LTA) or their delegate.
  • The APA would be concluded within the legal framework of the mutual agreement procedure provided for by the income tax treaty between Luxembourg and the other concerned State.
  • A fee would be due to cover the administrative costs incurred in processing the application, ranging between €10,000 and €20,000 depending on the complexity of the request and the volume of work required to process it.

With respect to MAP, ad hoc tax assessments could be issued, withdrawn, or modified according to a mutual agreement or an arbitration decision under an income tax treaty.

Transfer pricing documentation requirements

The bill would introduce transfer pricing documentation requirements in line with the OECD guidelines effective beginning tax year 2024.

  • Documents that need to be provided upon request to the LTA, including transfer pricing documentation, would need to be shared in a readable electronic format, whenever it exists.
  • Luxembourg tax-resident associated companies and permanent establishments (PEs), part of a group in scope of country-by-country (CbC) reporting rules, would be required to present, upon request, a Local file to justify their transfer pricing policy.
  • A Master file would also be required for Luxembourg tax-resident companies and PEs with a turnover exceeding €100 million or assets worth more than €400 million (thresholds computed on a standalone basis).

General tax procedures

The bill would introduce various changes to general tax procedures, including in relation to:

  • Filing of the annual accounts (effective beginning tax year 2024)
  • Tax collection
  • Enhanced cooperation between tax and regulatory authorities
  • Tax reclaims applicable upon request
  • Tax reclaims involving an estimated assessment of income (effective beginning tax year 2024)
  • Deadline to file an appeal of a tax reclaim with the administrative tribunal

Next steps

The bill must follow Luxembourg’s parliamentary procedure before it is adopted. Therefore, its provisions are not final and might be subject to change.

Read an April 2023 report prepared by the KPMG member firm in Luxembourg



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