LUXEMBOURG Law and Practice Contributed by: Oliver R Hoor and Fanny Addouda, ATOZ Tax Advisers
7.5 APA Application Deadlines Unilateral APA requests have to be filed before the transaction takes place. As far as bilateral and multilateral APAs are concerned, they gen - erally have to be requested within three years starting from the first notification of the action resulting (i) in taxation not in accordance with the provisions of the covered tax agreement, (ii) in the question in dispute or (iii) in double taxation, depending on whether the request is made dur - ing a MAP initiated based on a double tax treaty, based on the law implementing the EU Directive on tax dispute resolution mechanisms in the EU, or based on the EU Arbitration Convention. 7.6 APA User Fees In the same was as any other advance tax clear - ance dealing with company taxation issues, uni - lateral APAs are subject to a fee which is deter - mined by the LTA upon receipt of the request and ranges between EUR3,000 and EUR10,000, depending on the complexity and the amount of work required. In practice, in transfer pricing matters, the fee very often reaches EUR10,000. The fee is payable within one month. Based on the legislation in force, no fee applies to bilateral or multilateral APAs. However, should draft law No 8186 (introducing a new procedure for requesting an advanced bilateral or multilat - eral agreement on transfer pricing pursuant to the double tax treaties) become law in its cur - rent form, a fee ranging between EUR10,000 and EUR20,000 (depending on the level of complexi - ty and the amount of work required) would apply. 7.7 Duration of APA Cover The APA is valid for a time period of maximum five tax years and has a binding effect on the tax authorities, except in the following situa - tions: (i) the situation or operations described are not accurate, (ii) the situation or operations
performed differ from the ones described in the APA request, or (iii) it appears that the APA is not, or no longer, in line with Luxembourg, EU or international tax law. 7.8 Retroactive Effect for APAs Given that unilateral APA requests have to be filed before the transaction they relate to takes place, in principle, there is no possible retroac - tive effect. 8. Penalties and Documentation 8.1 Transfer Pricing Penalties and Defences Luxembourg legislation does not provide for penalties which are transfer pricing specific or which are linked to the preparation and main - taining of transfer pricing documentation. If a transaction has been priced in such a way that it does not reflect the arm’s length principle, the tax authorities will perform an adjustment based on Article 56 of the LITL. However, penalties might apply in the context of mandatory reporting requirements, which include transfer pricing data, such as under the CbC reporting requirements, where the LTA may levy, on a discretionary basis, a fine of up to EUR250,000 in cases of non-filing, late fil - ing or incomplete or incorrect filing of the CbC report, as well as in cases of non-compliance with the filing rules. The same level of penalties also applies in case of breach of the reporting requirements under the law implementing DAC6, which also covers transactions which are trans - fer pricing related. As far as transfer pricing documentation is con - cerned, based on paragraph 171 of the LGTL, it only has to be provided to the tax authorities
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