LUXEMBOURG Trends and Developments Contributed by: Peter Moons and Katerina Benioudaki, Loyens & Loeff
Lastly, when taxpayers seek to apply the S&S Approach for the first time, they should include in their local file or other relevant TP documen - tation their consent to apply the approach for a minimum of three years, unless transactions are no longer in scope during that period, or there is a significant change in the taxpayers’ business, and notify that circumstance to the tax authori - ties of the jurisdictions involved in the transac - tion. Tax certainty and elimination of double taxation Specific considerations on mutual assistance procedures (MAPs) concerning the application of the S&S Approach have been included in the Report. This concerns the following MAP situ - ations: • where one jurisdiction applies the S&S Approach and the other does not; and • where there is a dispute on the application of the S&S Approach between jurisdictions. If only one jurisdiction applies the S&S Approach, taxpayers and jurisdictions involved shall justify their positions under the OECD Guidelines with - out relying on the S&S Approach during the MAP process. Conclusion and application to Luxembourg As opposed to Pillar Two, the scope of Amount B is limited to the Qualifying Activities and does not set a minimum revenue threshold for taxpay - ers to fall in scope. Jurisdictions can choose to apply the simplified and streamlined approach for Qualifying Activities of tested parties in their jurisdictions for fiscal years commencing on or after 1 January 2025 and the list of countries applying the S&S approach should be moni - tored notably for those electing a mandatory approach.
To date, Luxembourg has not implemented the S&S Approach into its legislation. Nevertheless, the Report provides valuable guidance to tax - payers and the LTA on how to properly address the TP of the Qualifying Activities. Countries with developed distribution and marketing activities, like Germany and the Netherlands, have already adopted the S&S Approach in their domestic law. Despite of the fact that Luxembourg is well known for its strong financial and banking indus - try, it remains to be seen whether it will follow the trend of neighbouring countries, especially in light of very large taxpayers engaged, inter alia, in the distribution sector. Public Country-by-Country Reporting Background and timeline Bill No 8158 transposing the provisions of Direc - tive (EU) 2021/2101 on public country-by-coun - try reporting (CbCR) into Luxembourg domestic law was published on 22 August 2023, in the Memorial A of the Official Gazette under num - ber 532 (the “Law” ). As part of EU’s initiatives to enhance corporate and tax transparency and public scrutiny, public CbCR is a global action requiring MNEs to publicly disclose data of their tax activities to different stakeholders. The Law provides for four categories of com - panies that are required to publish and provide certain information. These include Luxembourg- based MNEs and non-EU based MNEs conduct - ing a business activity in Luxembourg through a subsidiary or a branch with a consolidated annu - al turnover at the balance sheet date of at least EUR750 million for each of the last two consecu - tive years. The in-scope entities shall be covered by the EU accounting directive and should be organised under the following legal forms: Scope of application Who should disclose?
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