Luxembourg tax: Tax information exchange agreement law approved
The Luxembourg Chamber of Deputies approved Law No. 6072 on 17 March 2022 in relation to the exchange of tax information upon demand. The law is designed to bring Luxembourg in line with the OECD information exchange standards. It also provides for the approval of 20 tax treaties and protocols that comply with the OECD model for exchange of information and defines the procedural framework for the exchange of information. Finally, Law No. 6072 confirms that this procedure will apply to the existing treaty with India, which contains a "most favored nation" clause. The following tax treaties, all of which were signed in 2009, are now ratified by Luxembourg: Armenia, Bahrain, Liechtenstein, Monaco and Qatar.
The following tax protocols, also signed in 2009, are now ratified by Luxembourg: Austria, Belgium, Denmark, Finland, France, Germany, Iceland, Mexico, Netherlands, Norway, Spain, Switzerland, Turkey, the U.K. and the U.S.
These agreements apply generally beginning in the tax year following the year the exchange of instruments of ratification takes place, except for the protocol with the U.S., which applies for tax years starting on or after 1 January 2009, and those with France and Germany, which apply for tax years starting on or after 1 January 2010.
Law No. 6072 sets out the procedures for treaty partner tax authorities to request information from the relevant Luxembourg authorities. A request for information on specific taxes must be addressed to the Direct Taxation Authority, the Luxembourg Registry or the Customs and Excise Authority, depending on which taxes are involved.
A request for information must be sufficiently detailed - in line with the OECD principles for the exchange of information upon request - and should include:
- Identity of the person under examination;
- Nature and form of the information required;
- Tax purpose of the information;
- Grounds for believing the information is held by the requested state;
- Name and address of person believed to be in possession of the information;
- Statement that the request is in conformity with the law and administrative practice of the applicant state; and
- Statement that all local means have been used by the applicant state to obtain the information.
On the Luxembourg side, the process for a request for information begins when an information request is received. The Luxembourg competent tax authorities will determine whether the request complies with the provisions of the relevant treaty, in particular, whether the information requested is "foreseeably relevant" for the application of the treaty or enforcing the domestic law of the treaty partner requesting the information.
The Luxembourg tax authorities will then notify the data holder and request that the holder provide the information within one month. A data holder may be, for example, a bank, insurance company or other financial institution or financial services provider, but no specific list is provided in the treaties, protocols or Law No. 6072. If the person in possession of the information fails to comply, it may be fined in an amount up to EUR 250,000.
Law No. 6072 allows any person concerned or that demonstrates a legitimate interest (including the person in possession of the information) to file a claim with the Tribunal Administratif for an extension of the deadline to produce the information requested, but the request must be made within one month of the notification to the holder of the information. The person in possession of the information also may petition for the cancellation of fines levied. The Cour Administrative will review appeals from the Tribunal Administratif.
The approval of Law No. 6072 clearly demonstrates Luxembourg's commitment to comply with international tax standards.