Country-by-country reporting (CBCR) implementation in Luxembourg
On 13 December 2016, to ensure compliance with the BEPS Action Plan, the Luxembourg Parliament adopted bill of law No. 7031 (CBCR Law) implementing Council Directive (EU) 2016/881 of 25 May 2016 (DAC IV) as regards mandatory automatic exchange of information in the field of taxation and introducing new reporting obligations for multinational companies. Based on the information attached, you should be able to assess the impact of the new legislation on your group companies by:
- determining whether they are reporting entities or not;
- identifying information the group entity must file (if it is a Reporting Entity under the Luxembourg CBCR Law) or notify (if they are part of a MNE Group falling under the CBCR rules) and to whom;
- taking into account the key deadlines of the Luxembourg CBCR Law; and
- being aware of the risks and sanctions in case of non-compliance with the Luxembourg CBCR Law.
Who is concerned?
Even though the legislation is primarily aimed at multinationals, it may potentially have an impact on alternative funds as well as investment structures. In practice any (Luxembourg) enterprise forming part of a collection of enterprises related through ownership or control such that it is part of a group that is either:
i. required to prepare Consolidated Financial Statements for financial reporting purposes under applicable accounting principles; or
ii. would be required to do so if equity interests in any of the enterprises were traded on a public securities exchange
is required to comply with the CBCR Law unless such group has a consolidated group revenue of less than EUR 750 million.
Is immediate action required?
In connection with the entry into force of the CBCR Law, the Luxembourg tax administration has published an FAQ which postpones the initial notification requirement exceptionally until 31 March 2017. The first CBC reporting is due by 31 December 2017 at the earliest.
Further clarification forthcoming
Clarification as to whether and how CBC reports submitted on a voluntary basis by Parent Entities established, inter alia, in the United States, Japan, Switzerland and Liechtenstein will likely be forthcoming in 2017.
By the same token more details on the unique access point and the technical details for the CBC reporting will be made available in 2017 through the tax administrations FAQ.
Click on the link below to read the full document describing background, concerned entities, information that should be reported, timing, sanctions and other aspects of the CBCR Law.