{"id":114730,"date":"2025-10-06T11:57:36","date_gmt":"2025-10-06T11:57:36","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=114730"},"modified":"2025-10-09T09:04:25","modified_gmt":"2025-10-09T09:04:25","slug":"luxembourg-tax-disputes","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/luxembourg-tax-disputes\/","title":{"rendered":"Luxembourg: Tax Disputes"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-114730","comparative_guide","type-comparative_guide","status-publish","hentry","guides-tax-disputes","jurisdictions-luxembourg"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Pinsent Masons<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/05\/Pinsent-Masons_Stacked-Colour_CMYK.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Pinsent Masons<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/05\/Pinsent-Masons_Stacked-Colour_CMYK.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Tax Disputes laws and regulations applicable in Luxembourg<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\t<div class=\"additional-information\"><p>The below focuses on the taxation of companies (corporate or partnership) and excludes individual taxation. In addition, the below is not an extensive tax analysis of the different aspects of the procedure but a pragmatic summary of it that intends to give the main elements so that readers are familiarised with the basics.<\/p>\n<\/div>\r\n\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it necessary for a taxpayer to register with the tax authority? Are separate registrations required for corporate income tax and value added tax\/sales tax?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Registration for corporate tax purposes<\/strong><\/p>\n<p>A company (corporate or partnership) will be automatically registered with the Luxembourg tax authority after filing its article of incorporation to the Luxembourg Business Register (which includes in particular the Luxembourg Trade and Companies Register) for publication purposes. The <em>Centre des technologies de l&#8217;information de l\u2019\u00c9tat<\/em> (CTIE) automatically assigns a national registration number to the company which is sent to the registered office of the company. The process usually takes a few weeks but could take a few months depending on the period of the registration. In any case, the taxpayer can contact the tax authorities if it has any questions regarding the process or if it has not yet received its tax number.<\/p>\n<p><strong>Registration for value added tax (VAT) purposes<\/strong><\/p>\n<p>As far as VAT is concerned, the registration of a taxpayer is not always required. A preliminary analysis should be done to determine whether the taxpayer is subject to VAT and if it is the case if exemptions are available. The law of 12 February 1979 on value added tax as amended (\u201c<strong>VAT Law<\/strong>\u201d) provides also the possibility to be subject to VAT on option in specific cases.<\/p>\n<p>If a taxpayer needs to register for VAT purposes (i.e. a taxpayer subjects to VAT without being exempt or a taxpayer that opts to be subject to VAT), the VAT payer must submit an initial declaration or a declaration of option to the competent VAT office. The forms are available online and the process should also be done online. The registration must take place within 15 days from the start of the activity for taxable persons that are not exempt from registration.<\/p>\n<p>In addition, some taxable persons have to register for VAT purposes even though they are exempt from registration or not liable for VAT. For instance, the registration should be done before the (i) provision of services in another EU Member State for which only the buyer is liable for VAT; or (ii) intra-Community acquisitions of goods subject to VAT in Luxembourg subject to the reverse charge mechanism; or (iii) purchase of services from providers established outside Luxembourg and where the buyer is liable for VAT (reverse charge mechanism).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In general terms, when a taxpayer files a tax return, does the tax authority check it and issue a tax assessment \u2013 or is there a system of self-assessment where the taxpayer makes their own assessment which stands unless checked?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In practice, tax assessments are frequently issued automatically after the filing of the corporate tax returns pursuant to \u00a7 100a of the Abgabenordnung\u00a0Vom 22. Mai 1931 (\u201c<strong>AO<\/strong>\u201d). The taxpayer has 3 months to challenge it. After this period, no claim can be filed against the tax due.<\/p>\n<p>However, the tax assessments issued under the provision of \u00a7 100a AO are temporary and the tax authorities can proceed to any further verification within the 5 years prescribed period including requesting any additional information or document that seems necessary to the Luxembourg tax authorities. After the prescribed period, the tax becomes definitive, and no further investigation or amendments can be conducted by the tax authorities. It should be noted that the 5 years prescribed period is extended to 10 years \u201cin the event of non-declaration or in the event of additional taxation for incomplete or inaccurate declaration, with or without fraudulent intent\u201d (article 10 of the law of 27 November 1933 on the collection of direct contributions, excise duties on spirits and social insurance contributions).<\/p>\n<p>In the case of VAT, unlike direct taxes, a system of self-assessment is applied, i.e. the taxables person declare the output VAT that they have charged and after deducting the input VAT they pay the balance spontaneously to the registration authority. In the normal case, no tax assessment is issued. A tax assessment is issued only in exceptional cases, i.e. if there is an automatic correction (Article 73 of the VAT Law) or automatic taxation (Article 74 of VAT Law).<\/p>\n<p>Upon receipt of a duly completed VAT return, the tax office is, in principle, supposed to inform the taxable person that his or her return is provisionally accepted, i.e. that it does not appear to give rise to an automatic correction or assessment. This information is only provisional.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can a taxpayer amend the taxpayer\u2019s return after it has been filed? Are there any time limits to do this?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A taxpayer can amend its corporate tax return, if it realises that it includes a material mistake or a mistake regarding the tax qualification of the revenues \/ expenses. If the mistake is in favour of the taxpayer, the latter has the choice (i) to file a rectified tax return or (ii) leave the return as it is for the review of the tax authorities until the tax assessment is issued. If the tax authorities see the mistake, it will rectify it. Otherwise, if the tax authorities did not fix the error, once the tax assessment is issued, no rectified tax returns can be filed anymore. The taxpayer has therefore to file a claim on the tax assessment to rectify the mistake.<\/p>\n<p>If the mistake is not in favour of the taxpayer (i.e. leading to a reduction of the tax to be paid), he must file a rectified return until the prescribed period elapses (i.e. no matter whether the tax assessment has been issued or not). The tax authorities will then issue a new tax assessment.<\/p>\n<p>Regarding VAT, in practice, the VAT authorities accept corrective tax returns filed within the prescribed period.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Please summarise the main methods for a tax authority to challenge the amount of tax a taxpayer has paid by way of an initial assessment\/self-assessment.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>One process is for the tax authorities to <strong>request additional information<\/strong> from the taxpayer following the filing of the tax returns to gather elements to support tax to be paid. For example, in case the taxpayer has been engaged in transactions with related companies located in non-cooperative jurisdictions for tax purposes on the European Union list &#8211; which should be notified in the corporate tax returns &#8211; the tax authorities usually request more information on such transactions (e.g. the nature of the transaction, a detailed description of the transaction including the supporting documentation, the identity of the companies involved, the countries where the companies are located and the amount at stake). Similarly, the tax authorities would ask the taxpayer to provide a capital account statement or a valuation report showing the market value of its participation in another entity. More basically, the taxpayer could be asked to provide any documentation justifying a level of payment made between related parties (for instance under the form of a transfer pricing report). The taxpayer has a duty to cooperate with the tax authorities and should give them the information they requested. The tax authorities can apply penalties if the taxpayer does not provide the necessary information on time. However, tax authorities can grant an extension of the deadline to the taxpayer upon request if needed to collect the requested information. Based on that information, the tax authorities determine the opportunity to go further and to reassess the taxable basis of the taxpayer by issuing a tax assessment accordingly.<\/p>\n<p>A second \u201cmethod\u201d could be for the tax authorities to <strong>directly reassess the amount of tax due by issuing a tax assessment that differs from what the taxpayer has reported<\/strong> in its tax returns. The taxpayer has 3 months to contest this new assessment. A dialogue starts with the tax authorities and if no agreement is found, the case could be brought to the Court.<\/p>\n<p>In any case, the tax authorities always give the opportunity to the taxpayer to explain the position it took in the corporate tax returns. A dialogue is established between the tax authorities and the taxpayer which could be smoother than in other jurisdictions.<\/p>\n<p>The tax authorities do have ultimately the possibility to proceed to an <strong>automatic taxation<\/strong> (\u201c<em>taxation d\u2019office\u201d)<\/em>, in particular if the taxpayer does not answer to the tax authorities\u2019 requests. Such taxation is not always in line with the real tax base the taxpayer should have been subject to as it is based on the information available to the tax authorities.<\/p>\n<p>It should also be noted that, in principle, once the tax authorities have issued the tax assessment and the taxpayer received it the tax assessment cannot be modified by the tax authorities anymore. Likewise, the taxpayer cannot obtain the modification of such tax assessment if a claim is not introduced on time. This derives from the &#8220;<em>authorit\u00e9 de la chose jug\u00e9e<\/em>&#8221; However, in case of new elements, as per the meaning detailed in various case laws, the tax authorities can issue a corrective tax assessment before the prescribed period elapsed. The taxpayer must have the opportunity to be heard by the tax authorities before such issuance.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the time limits that apply to such challenges (disregarding any override of these limits to comply with obligations to relief from double taxation under a tax treaty)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As mentioned in section 2., for corporate income tax, municipal business tax and net worth tax, the limitation period expires at the end of the fifth year term following the date of origination of the claim (article 10 paragraph 1 and 3 of the law of 27 November 1933) and at the end of the tenth year term in case of incomplete or inaccurate return, with or without fraudulent intention of the taxpayer. The limitation period can be interrupted or suspended in certain cases.<\/p>\n<p>For VAT the limitation period expires five years from December 31 of the year in which the sum of money to be collected has fallen due (article 81 paragraph 1 of the VAT Law).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is tax fraud defined in your law?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Criminal tax offenses include (i) tax evasion (\u201c<em>fraude fiscale<\/em>\u201d), (ii) aggravated tax evasion, (iii) tax fraud (\u201c<em>escroquerie fiscal<\/em>\u201d) and (iv) attempts to commit those offenses.<\/p>\n<p>Two elements define tax evasion (\u201c<em>fraude fiscale<\/em>\u201d) in Luxembourg as set out in \u00a7396of the AO:<\/p>\n<ul style=\"padding-left: 0\">\n<li>A material element\n<ul style=\"padding-left: 5\">\n<li>Obtaining an unjustified tax advantage for the taxpayer or for another person or reduction in tax revenue or<\/li>\n<li>using assets benefitting from exemptions \/ tax advantages contrary to the purposes of the law providing those exemptions \/ advantages<\/li>\n<\/ul>\n<\/li>\n<li>A moral element\n<ul style=\"padding-left: 5\">\n<li>Intentionally either triggering the advantages or intentionally omitting to inform the tax authorities on inappropriate uses of assets benefitting from exemption \/ advantages.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>It is sufficient that a lower amount of tax has been established or that a tax advantage has been unduly granted or retained as a result of the offence. Whether the amount that would otherwise have been set should have been reduced for other reasons or whether the benefit could have been claimed for other reasons is irrelevant.<\/p>\n<ul style=\"padding-left: 0\">\n<li>As from 2017, aggravated tax evasion, tax fraud (\u201c<em>escroquerie fiscal<\/em>e\u201d) and attempts to commit this offence were included in the laws to be part of tax criminal offences. These offences apply to direct taxes, VAT (article 80, paragraph 1er, of the VAT law dated 12 February 1979 as amended), registration duty and gift tax (article 29, 1 and 2 of the law dated 28 January 1948 as amended). Definitions of such notions have been summarised below together with the sanction applicable for each.<\/li>\n<\/ul>\n<table style=\"font-size: 10px\" border=\"1\">\n<tbody>\n<tr>\n<td width=\"84\"><\/td>\n<td width=\"123\"><em>Simple tax evasion<\/em><\/td>\n<td width=\"113\"><em>Involuntary tax evasion<\/em><\/td>\n<td width=\"134\"><em>Aggravated tax evasion (or attempt to)<\/em><\/td>\n<td width=\"98\"><em>Tax fraud (or attempt to)<\/em><\/td>\n<\/tr>\n<tr>\n<td width=\"84\"><em>Definition<\/em><\/td>\n<td width=\"123\"><em>Obtain intentionally an unjustified tax advantage for the taxpayer or a third party using fraudulent method<\/em><\/td>\n<td width=\"113\"><em>Reduction of the tax burden by not complying intentionally or by negligence to tax obligation<\/em><\/td>\n<td width=\"134\"><em>&#8211;\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Obtain intentionally an unjustified tax advantage<\/em><\/p>\n<p><em>&#8211;\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 representing more than 1\/4 of the annual tax legally due or the refund due, but not less than EUR 10,000 or if the amount of tax evaded or refund is greater than EUR 200,000<\/em><\/td>\n<td width=\"98\"><em>&#8211;\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Obtain intentionally an unjustified tax advantage using fraudulent method<\/em><\/p>\n<p><em>&#8211;\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Representing a significant amount<\/em><\/td>\n<\/tr>\n<tr>\n<td width=\"84\"><em>Sanctions<\/em><\/td>\n<td width=\"123\"><em>Fine up to 50% of the amount of tax evaded or the amount of the undue reimbursement with a minimum of 10%<\/em><\/td>\n<td width=\"113\"><em>Fine up to 25% of the amount of tax evaded or the amount of the undue reimbursement with a minimum or 5%<\/em><\/td>\n<td width=\"134\"><em>Imprisonment from one month to 3 years (to 4 years in the case of VAT)<\/em><\/p>\n<p><em>Fine of EUR 25,000 to six times the amount of tax evaded<\/em><\/td>\n<td width=\"98\"><em>Imprisonment from one month to 5 years<\/em><\/p>\n<p><em>Fine of EUR 25,000 to ten times the tax evaded<\/em><\/td>\n<\/tr>\n<tr>\n<td width=\"84\"><em>Legal Basis<\/em><\/td>\n<td width=\"123\"><em>\u00a7396 (1) AO<\/em><\/td>\n<td width=\"113\"><em>\u00a7402 AO<\/em><\/td>\n<td width=\"134\"><em>\u00a7396 (5) AO<\/em><\/td>\n<td width=\"98\"><em>\u00a7396 (6) AO<\/em><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is tax fraud treated? Does the tax authority conduct a criminal investigation with a view to seeking a prosecution and custodial sentence?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Actions should be taken before the 10 years prescribed period has elapsed which run generally as from the issuance of the tax assessment or the filling of the tax returns when no tax assessment has been issued yet (in such case it would be attempted tax evasion).<\/p>\n<p>Upon referral by the tax authorities to the Public Prosecutor&#8217;s Office, upon referral by another authority or a service provider\/third party (e.g. bank, statutory auditor, accountant, domiciliary, lawyer) or upon referral from the Public Prosecutor&#8217;s Office itself a tax criminal investigation could be started. The Public Prosecutor&#8217;s Office will decide then which actions to take to evidence the fraud. To this end the Public Prosecutor&#8217;s Office can require an investigating judge to open a preliminary judicial investigation and decide whether to continue the proceedings or close the case.<\/p>\n<p>If there is sufficient evidence, the Prosecutor can use the summons to the taxpayer (\u201c<em>citation \u00e0 pr\u00e9venu<\/em>\u201d).<\/p>\n<p>There is also a procedure called the \u201c<em>jugement sur accord<\/em>\u201d which aims to negotiate a common position with the taxpayer on the penalty to apply to the taxpayer. We will not enter into details of this procedure that applies only for Aggravated tax evasion or Tax fraud and is not frequently seen in practice.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In practice, how often is a taxpayer audited after a return is filed? Does a tax authority need to have any justification to commence an audit?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It depends on the files, and the complexity of the operations and transactions carried on by the taxpayer. No justification is needed in principle to start reviewing in detail the corporate tax returns of the taxpayer. In practice, tax authorities start an audit when they are suspicious of elements in a tax return, or elements such as accounts or tax returns which are not filed on time or not filed at all or are wrongly filed. Big amounts or non-straightforward transactions may also tend to catch the eye. The tax authorities can also investigate following communications from other tax authorities or after DAC 6 reporting.<\/p>\n<p>Concerning VAT, it depends also on the taxable activity carried out. In practice, inspections are frequent. They may involve simple checks, in which case the inspection is relatively brief, or on-site observations or in-depth inspections. The VAT agent will issue a detailed report summarising their findings and the observations made by the taxpayer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the tax authority have to abide by any standards or a code of conduct when carrying out audits? Does the tax authority publish any details of how it in practice conducts audits?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Circulars are published and available on how some Luxembourg tax matters should be approached by the tax authorities. However, no code of conduct is published on the process of audit itself and if such code or audit related documents do exist, they are usually not made available to the public. Taxpayers may however rely on general tax principles to which the tax authorities are subject. These would include for instance the right for the taxpayer to a hearing and being able to present his arguments, non-retroactivity principle, proportionality principles, legality of taxation, equality of taxation, the tax authorities should remain objective in their audit and reassessments.\u00a0 Certain of these principles do bring a framework to tax audits and reassessments. Other important principles such as the right to a fair trial would be more relevant in a litigation context.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the tax authority have the power to compulsorily request information? Does this extend to emails? Is there a right of appeal against the use of such a power?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Under Luxembourg tax law, particularly \u00a7171 to 175 of the AO\u00a0and the\u00a0Income Tax Law, the Luxembourg tax authorities have broad powers to:<\/p>\n<ul style=\"padding-left: 0\">\n<li>Request documents, records, and explanations from taxpayers and third parties (e.g. banks, employers, service providers).<\/li>\n<li>Conduct on-site inspections and audits.<\/li>\n<li>Access electronic communications, including emails, if they are relevant to determining the taxpayer\u2019s obligations:\n<ul style=\"padding-left: 5\">\n<li>The request must be proportionate and justified.<\/li>\n<li>It must comply with\u00a0data protection laws, including the GDPR (i.e. the emails must not contain sensitive personal data that would breach GDPR provisions).<\/li>\n<li>In practice, this often involves requesting emails from business accounts\u00a0rather than private ones, unless the private account is used for business purposes. Furthermore, any request for email data must adhere to the principle of proportionality, meaning the scope of the request must be strictly necessary and appropriate for the purpose of the investigation.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>It should be noted that the tax office must only require evidence which it can reasonably be assumed is available to the taxpayer or that it would be &#8220;reasonably accessible&#8221; if the taxpayer attempted to gather it.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can the tax authority have the power to compulsorily request information from third parties? Is there a right of appeal against the use of such a power?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>To a certain extent the Luxembourg Tax Authorities can request information from third parties especially if the third parties appear to be the only source of the needed information. The third parties should give the information available but are not required to proceed with specific investigations to obtain them. Some third parties may rely on legal exemptions to such requests such as close family members, clerical members, medical professionals, lawyers, financial institutions or if there is a risk of self-incrimination for such third parties. The obligation to disclose can be very broad if it concerns all information that might be useful to the tax authorities in finalising the tax due. The information should be given in the form required by the tax authorities and supporting documentation could be required.<\/p>\n<p>The taxpayer in some cases is not required to be informed of the request made by the tax authorities to a third party.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to settle an audit by way of a binding agreement, i.e. without litigation?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Before going to Court, there is an administrative phase where the Luxembourg tax authorities and the taxpayer exchange their points of view. Most of the time, this phase is satisfactory to settle the points to be clarified. There is no binding agreement as such. The tax authorities issue a final tax assessment which reflects their position and if the taxpayer agrees, the procedure stops here.<\/p>\n<p>Furthermore, the tax burden of the taxpayer must be grounded in the law (principle of legality). Consequently, there is no room for negotiation in respect of the tax to be paid. However, there might be a common agreement on the characterisation of the facts and therefore the tax treatment applicable thereto. For example, if some expenses should be considered either as in relation to the professional activity of the taxpayer (and therefore deductible) or as personal and therefore non-deductible. The purpose of such agreement is to reduce litigation cases and ensure a fair taxation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If a taxpayer is concerned about how they are being treated, or the speed at which an audit is being conducted, do they have any remedies?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>We are not aware of a formal process regarding complaints on how a taxpayer is treated during an audit or regarding how quickly an audit is actually performed.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If a taxpayer disagrees with a tax assessment, does the taxpayer have a right of appeal?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The taxpayer can challenge the tax assessment issued by the Luxembourg Tax Authorities within 3 months after its issuance by introducing a claim in front of the <em>Directeur des contributions<\/em> of the competent tax office<sup>1<\/sup> or the VAT office as detailed below.<\/p>\n<p><u>Footnote(s):<\/u><\/p>\n<p><sup style=\"font-size: 9px\">1<\/sup> <span style=\"font-size: 12px\"> \u00a7228 of the AO<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the right of appeal to an administrative body (independent or otherwise) or judicial in nature (i.e. to a tribunal or court)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Tax litigation is divided between the Administrative Courts and the Civil Courts. Income tax, corporate income tax, wealth tax, municipal business tax, property tax and disputes concerning withholding taxes fall within the jurisdiction of the administrative judge (i.e. first instance in front of the Administrative Tribunal and second instance in front of the Administrative Court). VAT, registration fees, gift tax, inheritance tax, customs duties, excise duties, the various taxes levied by the State (the tax on motor vehicles, the cabaret tax, the tax on sports betting, etc.), as well as remunerative municipal taxes fall within the jurisdiction of the civil judge (i.e. first instance in front of the Judicial Tribunal, the second instance in front of the Court of Appeal and last instance in front of the Court of Cassation).<\/p>\n<p>As mentioned above the taxpayer has three months to contest decisions taken by the Luxembourg tax authorities. This claim is to be introduced to the <em>Directeur des contributions<\/em> of the competent tax office<sup>2<\/sup> or the VAT office, and, as the case may be the Director of VAT<sup>3<\/sup>\u00a0if it is about VAT matters. This prior administrative phase is mandatory and intends to initiate a dialogue between the tax authorities and the taxpayers to solve conflict without going to Court and at a lower cost.<\/p>\n<p>If the Director rejects the administrative claim, a judicial claim may be filed within three months from the notification of such rejection. If the Director does not reply within six months of the introduction of the claim, the taxpayer can also introduce a judicial claim without time limit. The right of appeal to judicial institutions arises only in matters concerning the tax base in which the Director rules within the framework of his power to amend the taxable basis.<\/p>\n<p>In direct tax matters, if the Administrative Tribunal\u2019s decision is unfavourable, the taxpayer can appeal to the Administrative Court within forty days. Legal representation is required at the appeal stage. The litigation process in Administrative Court is primarily written, involving the exchange of legal briefs. In urgent cases, taxpayers may request interim measures, such as the suspension of enforcement. The procedures are governed by strict deadlines and formal requirements, and legal or professional representation is often necessary to navigate the process effectively.<\/p>\n<p>In indirect tax matters if the complaint is rejected or if the Director fails to respond within six months, the taxpayer may bring the case before the district Court. The Court will then examine the legality and merits of the tax decision.<\/p>\n<p>The civil litigation procedure in tax matters is formal and requires strict adherence to deadlines and procedural rules. Legal representation is highly recommended, although not always mandatory in the initial stages.<\/p>\n<p>The taxpayer must continue to pay the contested tax during the litigation process, and any adjustments will be made depending on the outcome of the case. The initiating petition must meet specific content requirements and be submitted within a defined time frame. It must comply with both formal and substantive conditions, otherwise it will be deemed inadmissible.<\/p>\n<p><u>Footnote(s):<\/u><\/p>\n<p><sup style=\"font-size: 9px\">2<\/sup> <span style=\"font-size: 12px\"> \u00a7228 of the AO <\/span><\/p>\n<p><sup style=\"font-size: 9px\">3<\/sup> <span style=\"font-size: 12px\"> Article 76(3) LTVA<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the hearing in public? Is the decision published? What other information about the appeal can be accessed by a third party\/the public?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Judicial Court hearings, such as those involving VAT disputes, may be public depending on the nature of the case and the discretion of the Court.<\/p>\n<p>In matters concerning\u00a0direct taxation procedures\u00a0hearings are public.<\/p>\n<p>The majority of the decisions are published after being anonymised.<\/p>\n<p>The court\u2019s deliberations, however, are not conducted in public.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the procedure mainly written or a combination of written and oral?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Before the administrative judge, the tax procedure is written. Only what is written in the brief (<em>m\u00e9moire)<\/em> is taken into consideration and oral observations not included in such brief are worthless.<\/p>\n<p>Regarding the judicial procedure, the rules of the New Civil Procedure Code (Nouveau Code de Procedure Civile) are applicable. The procedure is also written.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a document discovery process?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Luxembourg tax litigation, there is no formal discovery process comparable to common law jurisdictions. However, it adheres to the principle of \u201ccontradictory\u201d (<em>principe du contradictoire<\/em>), which requires that parties disclose to their opponents the documents and evidences they intend to rely on during the proceedings.<\/p>\n<p>While parties are not obligated to produce all documents in their possession, they must submit those that are relevant and useful to the resolution of the dispute. Each party is required to provide the Court with all documents supporting its claims, and any document referenced in written submissions must also be made available to the opposing party.<\/p>\n<p>Importantly, the Court will not consider the rights of the defence to have been violated if the opposing party was given an opportunity to respond orally to newly introduced documents and if both parties were able to freely discuss these documents during the hearing.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are witnesses called to give evidence?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Witness can be called to give evidence in front of the administrative or judicial jurisdiction. Testimony statement could also be used for example to prove the tax residency of a taxpayer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the burden on the taxpayer to disprove the assessment the subject of the appeal?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The burden of proof of the facts triggering the tax liability is on the tax administration while the proof of the facts releasing the taxpayer from the tax liability or reducing the tax rating belong to the taxpayer.<\/p>\n<p>The responsibility for the regularity of the tax procedure lies with the administration.<sup>4<\/sup><\/p>\n<p><u>Footnote(s):<\/u><\/p>\n<p><sup style=\"font-size: 9px\">4<\/sup> <span style=\"font-size: 12px\"> Article 59 of the law of 21 June 1999 on the rules of procedure before the administrative courts<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How long does an appeal usually take to conclude?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It took between 17 to 23 months to conclude an appeal in front of the Administrative Tribunal in 2023\/2024 and 163.4 days to conclude an appeal in front of the Administrative Court in 2024<sup>5<\/sup>.<\/p>\n<table style=\"font-size: 10px\" border=\"1\">\n<tbody>\n<tr>\n<td width=\"331\"><strong>Administrative Tribunal (Tribunal administratif)<\/strong><\/p>\n<table style=\"font-size: 10px\" border=\"1\">\n<thead>\n<tr>\n<td><strong>Judicial Year<\/strong><\/td>\n<td><strong>Average Scheduling Delay\u00b3<\/strong><\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>2023\/2024<\/td>\n<td>17 to 23 months<\/td>\n<\/tr>\n<tr>\n<td>2022\/2023<\/td>\n<td>13 to 20 months<\/td>\n<\/tr>\n<tr>\n<td>2021\/2022<\/td>\n<td>12 to 15 months<\/td>\n<\/tr>\n<tr>\n<td>2020\/2021<\/td>\n<td>12 months<\/td>\n<\/tr>\n<tr>\n<td>2019\/2020<\/td>\n<td>7 to 8 months<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/td>\n<td width=\"397\"><strong>\u00a0<\/strong><strong>Administrative Court (Cour administrative)<\/strong><\/p>\n<table style=\"font-size: 10px\" border=\"1\">\n<thead>\n<tr>\n<td><strong>Judicial Year<\/strong><\/td>\n<td><strong>Civil Year\u00b9<\/strong><\/td>\n<td width=\"181\"><strong>Average Duration\u00b2 for Resolving All Cases Pronounced During the Judicial\/Civil Year<\/strong><\/td>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>2024<\/td>\n<td>2024<\/td>\n<td width=\"181\">163.4 days<\/td>\n<\/tr>\n<tr>\n<td>2023<\/td>\n<td>2023<\/td>\n<td width=\"181\">158 days<\/td>\n<\/tr>\n<tr>\n<td>2022\/2023<\/td>\n<td><\/td>\n<td width=\"181\">153 days<\/td>\n<\/tr>\n<tr>\n<td>2021\/2022<\/td>\n<td><\/td>\n<td width=\"181\">140.84 days<\/td>\n<\/tr>\n<tr>\n<td>2020\/2021<\/td>\n<td><\/td>\n<td width=\"181\">182.47 days<\/td>\n<\/tr>\n<tr>\n<td>2019\/2020<\/td>\n<td><\/td>\n<td width=\"181\">134.11 days<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><u>Footnote(s):<\/u><\/p>\n<p><sup style=\"font-size: 9px\">5<\/sup> <span style=\"font-size: 12px\"> Reply by Mrs Elisabeth MARGUE, Minister of Justice, to Parliamentary Question No 1918 of 10 February 2025 by the Honourable Member Mr Dan HARDY<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does the taxpayer have to pay the assessment pending the outcome of the appeal?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The decisions taken by the Luxembourg tax authorities enjoy a presumption of legality, until the judge decides differently. Following \u00a7251 AO, the taxpayer will not be able to defer the payment of the tax debt by exercising an appeal. Furthermore, if the taxpayer does not pay his tax debt, the Treasury may commence recovery procedures.<\/p>\n<p>Regarding VAT, the notification of the reassessment triggers the obligation to pay the VAT due, even in case of the launching of a challenge by the VAT payer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions on who can conduct or appear in the appeal on behalf of the taxpayer?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>According to the administrative procedure, in first instance before the Tribunal, it is not mandatory to be represented by a lawyer, however, before the Court of Appeal representation by a lawyer (i.e. <em>Avocat \u00e0 la Cour<\/em>) is mandatory.<\/p>\n<p>In front of the judicial jurisdictions, a lawyer (i.e. <em>Avocat \u00e0 la Cour<\/em>) is always mandatory.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a system where the \u201closer pays\u201d the winner\u2019s legal\/professional costs of an appeal?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The unsuccessful party is ordered to pay court costs, however, each party must, irrespective of the outcome of the proceedings, bear its own legal fees which represent a more substantial amount. In certain cases, and on request, the administrative judge may award a procedural indemnity (\u201c<em>indemnit\u00e9 de proc\u00e9dure\u201d<\/em>) to the winner to cover the lawyer cost.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to use alternative forms of dispute resolution \u2013 such as voluntary mediation or binding arbitration? Are there any restrictions on when this alternative form of dispute resolution can be pursued?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A <strong>mediation<\/strong> is possible in the international context when there is a litigation involving at least two different jurisdictions. For instance the Law of 20 December 2019 provides a tax dispute settlement mechanism or the mutual agreement procedure provided for in the bilateral tax treaties concluded by Luxembourg.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a right of onward appeal? If so, what are all the levels of onward appeal before the case reaches the highest appellate court.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>For litigation brought before the administrative jurisdiction, the decision of the Administrative Tribunal can be appealed before the Administrative Court which is the last level of jurisdiction.<\/p>\n<p>For litigation before the judicial jurisdiction after bringing the case to the Court of Appeal, the last level of jurisdiction is the Court of Cassation.<\/p>\n<p>The \u201c<strong><em>remise gracieuse<\/em><\/strong>\u201d is another procedure which is a discretionary tax relief mechanism that allows taxpayers to request a partial or total waiver of a tax debt\u00a0without contesting its legality, based on principles of fairness and equity.\u00a0The procedure is governed by\u00a0<strong>\u00a7131 of AO.<\/strong> It allows the Director of the <em>Administration des Contributions Directes<\/em> or their delegate to grant a tax waiver or refund if the collection of the tax would result in\u00a0undue hardship. The chance of success is low.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the main penalties that can be applied when additional tax is charged? What are the minimum and maximum penalties?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Except the penalties in case of tax fraud as described in point 6, for late declarations or payments, the following penalties may apply:<\/p>\n<p>Regarding direct tax:<\/p>\n<ul style=\"padding-left: 0\">\n<li>Penalties for late submission\n<ul style=\"padding-left: 5\">\n<li>In the event of non-compliance with the filing deadlines of the tax returns, the tax office may charge the taxpayer or the debtor of the tax a supplement of up to 10% of the tax (\u00a7 168 AO).<\/li>\n<li>In addition, in the event of non-submission of the various returns within the time limit, the tax office may impose on the taxpayer or the person liable for payment of the tax a financial penalty up to EUR 25,000 (\u00a7202 AO).<\/li>\n<\/ul>\n<\/li>\n<li>Penalty payment\n<ul style=\"padding-left: 5\">\n<li>The fine in the case of intentionally incomplete or inaccurate tax returns could amount to between 5 and 25 % of the taxes evaded. The law specifies that the taxpayer&#8217;s intention is required. Penalties for absence of filling of tax returns may also apply.<\/li>\n<\/ul>\n<\/li>\n<li>Late payment interest<\/li>\n<\/ul>\n<p style=\"padding-left: 20px\">The taxpayer may request a delay for the payment of the tax debt to the Luxembourg tax authorities. If such request is accepted, the following interest will be applicable<\/p>\n<ul>\n<li style=\"list-style-type: none\">\n<ul style=\"padding-left: 5\">\n<li>no interest when the payment occurred within 4 months;<\/li>\n<li>0.1% per month for the period between 5 to 12 months after the tax is due;<\/li>\n<li>0.2% per month for the period between 13 months to 3 years after the tax is due;<\/li>\n<li>0.6% per month for the period exceeding 3 years.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p>If no extension to the deadline for payment is agreed, the 0.6% interest rate applies.<\/p>\n<p>In the event of non-payment of the tax debt on its due date, default interest is calculated not only on the tax due, but also on the surcharge due for late filing of the tax return.<\/p>\n<p>In VAT matters,<\/p>\n<ul style=\"padding-left: 0\">\n<li>Penalty amounts vary from EUR 250 to EUR 10,000 per offence.<\/li>\n<li>Fines for late payment may not exceed 10% per year of the tax in arrears. They are payable within one month of notification of the written decision, notwithstanding the exercise of a right of appeal.<\/li>\n<li>In case of late communication of some information to the VAT authorities, penalties can also apply for a maximum of EUR 25,000 per day late.<\/li>\n<li>Penalties of 10 to 50% of the amount of VAT evaded or undue refunds received can also apply in some cases.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If penalties can be mitigated, what factors are taken into account?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>This is established on a case-by-case basis and depending on the circumstances of each taxpayer. The difficult financial situation of the taxpayer could be a mitigating element, a sickness or an accident could also justify a late filing for instance.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Within your jurisdiction, are you finding that tax authorities are more inclined to bring challenges in particular areas? If so, what are these?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Based on recent case law, certain subjects regularly come up in cases that have led to an unfavourable decision for the taxpayer and concern:<\/p>\n<ul style=\"padding-left: 0\">\n<li>the liability of the managers\/legal representatives for the payment of the company&#8217;s tax debts (including withholding tax on salaries). In the large majority of cases, it was held that the manager was liable for wrongful non-performance. The administration has discretion to hold the legal representatives personally liable. It must justify its decision based on considerations of fairness. The representative cannot discharge his or her liability by invoking the fault of a third party, such as an accounting firm. He must assume constant supervision of those to whom he delegates responsibilities. Furthermore, the arguments seeking to exonerate himself from liability by invoking breaches prior to his taking up his duties were rejected.<\/li>\n<li>the re-characterisation of expenses as hidden dividend distributions, which are therefore not deductible: that could be re-characterisation of interest, leasing costs, travel expenses or certain legal fees as hidden distributions.<\/li>\n<li>exchange of information in tax matters. Requests for information have always been considered relevant. Another interesting point in this field is that the FATCA agreement takes precedence over the Luxembourg Constitution and the transfer of personal data under this agreement is excluded from the GDPR.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">In your opinion, are there any areas which taxpayers are currently finding particularly difficult to deal with when faced with a challenge by the tax authorities?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Luxembourg Tax Authorities may be considered as being more \u201copen minded\u201d than in other jurisdictions. First, they understand the various business considerations of the taxpayers. For example, when they required additional information, they are keen to grant extension of time to the taxpayer who might struggle to gather the required information while running their business at the same time.<\/p>\n<p>In addition, the dialogue with the taxpayer starts on the basis that the taxpayer has acted in good faith. The objective is not to punish the taxpayer that might not apply the tax rules properly \u2013 which are often really complex &#8211; but rather to find the correct taxation using the proper information and supporting documentation.<\/p>\n<p>What can be challenging for taxpayers is to know how to adopt recent regulations without guidelines from the tax authorities, particularly where they concern complex international tax matters that are difficult to analyse.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">\u202fWhich areas do you think will be most likely to be the subject of challenges and disputes in the next twelve months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Probably matters regarding the application of ATAD I and II, and Pillar II legislation. These are likely to be challenging to interpret as they come from Directives which are quite recent (thus we do not have much feedback on them) and should be applied on a harmonised basis with all EU member states. In addition, such legislation is often very complex by nature as it involves sophisticated finance concepts in an international work environment while trying to preserve business.<\/p>\n<p>Taxation has become increasingly complex with an inflation of laws inspired by international requirements including sophisticated concepts. However, we are confident that the tax authorities will remain pragmatic, understanding the taxpayers\u2019 constraints and continuing to establish a dialogue with taxpayers to impose a fair taxation to all.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">6563<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/114730","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=114730"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}