LUXEMBOURG Law and Practice Contributed by: Oliver R. Hoor and Fanny Addouda, ATOZ Tax Advisers
6.4 International Compliance Assessment Programme (ICAP) Luxembourg participates in the OECD ICAP on a vol - untary basis through its competent authority. While there is no separate domestic multilateral risk assess - ment programme, the Luxembourg tax administration may engage in ICAP cases alongside other participat - ing jurisdictions, allowing for a co-ordinated, upfront risk assessment of transfer pricing and PE issues. Participation remains discretionary and case-specif - ic, depending on the profile of the taxpayer and the agreement of the relevant tax authorities. In addition, Luxembourg is also participating in the European Trust and Cooperation Approach (ETACA) Pilot 2, a multilat - eral transfer pricing risk assessment initiative led by the European Commission, further demonstrating its commitment to co-operative compliance and trans - parency in international taxation. 7. Advance Pricing Agreements (APAs) 7.1 Programmes Allowing for Rulings Regarding Transfer Pricing Unilateral APAs With effect as from 2015, Luxembourg has formal - ised its procedure applicable to tax rulings, including those related to transfer pricing (unilateral APAs). This procedure is included in paragraph 29a of the LGTL, as well as in Grand Ducal Regulation of 23 December 2014. On top of the requirements applicable under the procedure of paragraph 29a, Luxembourg compa - nies performing intra-group financing activities have to provide the additional information listed in Circular 56/1 – 56bis/1 of the LTA, dated 27 December 2016. Bilateral or Multilateral APAs Based on the legal provisions currently in force, no formal programme has been implemented by Lux - embourg for bilateral and multilateral APAs, and Lux - embourg considers that these can be concluded by its competent authority based on the first sentence of Article 25 (3) of the OECD Model Tax Convention. Circular L.G. - Conv. D.I. No 601 of the LTA, dated 11 March 2021, provides guidance in this respect. Draft Law No 8186 introduces a new procedure (new paragraph 29c of the LGTL and related Grand-Ducal
Regulation) for requesting an advanced bilateral or multilateral agreement on transfer pricing pursuant to the double tax treaties concluded by Luxembourg. However, it is uncertain at this stage whether this draft law will ever become law since the draft provision on bilateral and multilateral APAs belongs to a broader piece of draft legislation that has been giving rise to discussions and criticism of the legislative process in many respects. Still, Luxembourg taxpayers are able to request bilat - eral or multilateral agreements in transfer pricing based on the EU Arbitration Convention and the Law of 20 December 2019 implementing Council Directive (EU) 2017/1852 of 10 October 2017 on tax dispute resolution mechanisms in the EU, or based on a dou - ble tax treaty. 7.2 Administration of Programmes APA requests have to be sent to the head of the tax office in charge of the taxpayer. However, if the APA request deals with company taxation issues, the request will first be submitted for opinion to the advance tax clearance commission ( Commission des décisions anticipées ). Based on Circular L.G. - Conv. D.I. No 601 of the LTA, dated 11 March 2021, transfer pricing MAP requests have to be sent to the economic division of the LTA (which is the authority in charge of transfer pricing cases) or to the Comité de Direction of the LTA, which is in charge of all MAP cases. 7.3 Co-Ordination Between the APA Process and Mutual Agreement Procedures While there is no provision dealing with this question, in practice, there should be co-ordination between the APA process and the MAP, even though the com - petent authorities administrating the two are not the same. Co-ordination between the MAP procedure and other procedures (such as a legal procedure before the administrative courts) is also covered in Circular L.G. - Conv. D.I. No 601 of the LTA, dated 11 March 2021.
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