LUXEMBOURG Law and Practice Contributed by: Oliver R. Hoor and Fanny Addouda, ATOZ Tax Advisers
6.2 Joint Audits While transfer pricing joint audits are not yet wide - spread in Luxembourg, the country participates in EU and OECD initiatives that promote them, as follows. EU Joint Audit Initiatives Under the EU Joint Audit Framework, Luxembourg can engage in joint audits with other EU member states as part of the Fiscalis 2020 and Fiscalis 2027 programmes. The Directive on Administrative Cooperation (DAC 7) enhances tax transparency and co-operation among EU tax authorities, facilitating more joint audits. OECD and BEPS Initiatives Luxembourg adheres to the OECD BEPS Action 13, which promotes international tax co-operation and joint audits. The OECD’s Forum on Tax Administration (FTA) encourages the use of joint audits to improve tax compliance in cross-border transfer pricing cases. In addition, Luxembourg has an extensive tax treaty net - work with more than 80 jurisdictions, which includes MAP provisions that allow for joint tax examinations. Luxembourg is also part of the Joint International Taskforce on Shared Intelligence and Collaboration (JITSIC), which enables global tax authorities to co- ordinate on high-risk tax issues, including transfer pricing. 6.3 Simultaneous Controls Luxembourg co-operates in simultaneous controls at both EU and international levels under the DAC, as implemented into domestic law, as well as under applicable bilateral and multilateral tax treaties. While Luxembourg does not currently operate a formal enhanced or co-operative compliance programme, its tax authorities increasingly participate in co-ordi - nated and – where appropriate – joint or simultaneous audits under EU and OECD frameworks. During such audits, communication is typically ensured through designated contact points and central co-ordination between the competent authorities, with information exchanged on an ongoing basis.
The most important scope extensions for transfer pricing purposes are as follows. • Advance pricing agreements (APAs): Council Direc - tive (EU) 2015/2376 (DAC3), implemented by the Law of 23 July 2016, which extended the automat - ic exchange to tax rulings and APAs. • CbC reporting: Council Directive (EU) 2016/881 (DAC4), implemented by the Law of 23 December 2016, which extended the automatic exchange to CbC reports. • Cross-border arrangements: DAC6, implemented by the Law of 25 March 2020, which introduced mandatory disclosure rules for intermediaries on certain reportable cross-border arrangements. The following cross-border transfer pricing arrange - ments are covered: (a) arrangements that involve the use of unilateral safe harbour rules (Hallmark E1); (b) arrangements involving the transfer of HTVI (Hallmark E2); and (c) arrangements involving intra-group cross-bor - der transfers of functions and/or risks and/or assets, if the projected annual earnings before interest and taxes (EBIT) during the three-year period after the transfer of the transferor(s) are less than 50% of the projected annual EBIT of such transferor(s) if the transfer had not taken place. Spontaneous Exchange of Information The LTA may also exchange information spontane - ously with other jurisdictions based on the DAC (in an EU context) or based on the Convention on Mutual Administrative Assistance in Tax Matters (which 152 jurisdictions have signed as of April 2026). Informa - tion can only be exchanged if the LTA have grounds for supposing that there may be a loss of tax in the other jurisdiction. Circular 56/1 – 56bis/1 of the LTA on the tax treatment of intra-group financing activities states that compa - nies that opted for the simplification measure that may apply to Luxembourg companies acting as mere inter - mediaries will be subject to spontaneous exchanges of information.
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