LUXEMBOURG Law and Practice Contributed by: Michiel Boeren, Jeronimo Charvarria, Maxime Grosjean and Gauthier Mary, Tiberghien
taxpayer. Qualifying IP assets are also fully exempt from NWT.
tionally reducing tax revenues. Involuntary tax fraud is caused by the taxpayer’s negligence. Criminal offences Aggravated tax fraud is wilful tax evasion where the evaded tax (or undue refund) exceeds either 25% of the tax due (with a minimum value of EUR10,000) or EUR200,000. Tax fraud ( escroquerie fiscale ) involves a significant amount of tax evaded, in terms of either the yearly taxes due or the absolute amount, and is committed through the systematic use of fraudulent manoeuvres to hide relevant facts from the authorities or mislead them. Tax Avoidance This is considered the use of tax rules and laws in a technically legal manner to obtain tax advantages or reduce tax liabilities, but potentially in a way that goes against legislative intent, which can result in it being deemed illegal by tax authorities and courts. Under the Luxembourg General Anti-Abuse Rule (GAAR), abuse occurs when a specific legal route is chosen with the main purpose or one of the main purposes of obtaining a tax advantage contrary to the intention of the tax law. The GAAR applies to all Luxembourg taxpayers. 5.2 Anti-Avoidance Mechanisms Luxembourg has the GAAR and specific anti-abuse rules (SAARs) in place to identify and combat abusive arrangements and schemes. Under the GAAR, arrangements that are not genuine, or a series of such arrangements, which are put in place with the main purpose or one of the main pur - poses of obtaining a tax advantage that defeats the object or purpose of the applicable tax law, shall be disregarded. Arrangements are considered non-gen - uine if they are not implemented for valid commercial reasons that reflect economic reality. Thus, the GAAR enables the Luxembourg tax authorities to disregard legal acts that are primarily tax-driven and contrary to the purpose of the law, unless the taxpayer can demonstrate valid non-tax reasons.
4. OECD/G20 Global Tax Reform 4.1 Pillar One – Amount B Luxembourg has not taken any steps to implement Pillar One (Amounts A and B). 4.2 Pillar One – Amount A Luxembourg has not taken any steps to implement Pillar One (Amounts A and B). 4.3 Pillar Two Luxembourg implemented the global minimum tax under Pillar Two by enacting EU Directive 2022/2523, which included a Luxembourg Qualifying Domestic Minimum Top-Up Tax (QDMTT), through the Law of 22 December 2023. This law came into force on 31 December 2023 and was subsequently amended in 2024 and 2025. 4.4 Specific Features or Deviations of Pillar Two Luxembourg’s legislation closely aligns with the OECD framework and remains fully compliant with the EU directive. Amendments to the law in 2024 and 2025 considered the latest OECD updates and guidance. 4.5 Digital Services Tax Luxembourg has not introduced a specific tax on digi - tal products. Any future initiative to implement such a tax would probably come about through EU-wide legislation or international negotiations. 5. Anti-Avoidance and Anti-Evasion Measures 5.1 Definition and Identification of Tax Fraud, Evasion, Tax Avoidance and Abusive Schemes Tax Evasion and Fraud Administrative infractions Simple tax fraud involves obtaining an undue tax advantage for oneself or somebody else, or inten -
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