Tax News

• Important amendment of US withholding and reporting regulations
  On October 27, 2009, a new US legislation has been introduced which will significantly change US withholding tax and reporting obligations. This is likely to impact financial service and asset management industry.
  Deutsche Fassung: Wesentliche Änderungen bei US-Quellensteuern und Meldepflichten
  November 2009
  
  
• Fight against VAT fraud in missing trader schemes - Proposal for a EC Directive
  The European Commission (“EC”) adopted a proposal for an optional and temporary application of the reverse charge mechanism to supplies of defined goods and service to business clients. This proposal tackles Missing Trader Intra-Community Fraud, commonly called carousel fraud. Broadly speaking, this type of fraud implies a supplier charging VAT to his customer but not paying it over to the tax authorities and "going missing", whereas his taxable customers benefit from a corresponding credit/refund. Under the reverse charge mechanism, the VAT is not charged by the supplier; it is payable by the customer, who can in principle deduct this selfinvoiced VAT at the same time.
  September 2009
  
  
• Introducing the electronic VAT system (“eTVA”)
  Under the bill whose purpose is to transpose the European VAT package directives into Luxembourg legislation, some taxable persons will be required to electronically submit their VAT returns and recapitulative statements of intra-Community deliveries. Using the electronic VAT system (hereafter “eTVA”) set up by the Luxembourg VAT authorities (the Administration de l’Enregistrement et des Domaines), taxable persons can already file and access their VAT returns online (periodic returns, yearly returns and recapitulative statements). The new filing rules would be effective 1 January 2010 and this gives companies the opportunity to start getting ready now for the use of the eTVA tools.
  Version française : Système eTVA
  Deutsche Fassung: Das eTVA System
  August 2009
  
  
• Donations to non-profit institutions in European Union Member States and EFTA Member States are tax deductible in Luxembourg
  In the future, the tax deduction of donations to non-resident non-profit institutions will be allowed and governed by a new circular issued by the Luxembourg direct tax authorities.
  Version française : Les dons versés à des organismes d’utilité publique ayant leur siège dans un État membre de l’Union européenne ou de l’AELE sont déductibles à Luxembourg
  Deutsche Fassung: Spenden an gemeinnützige Institutionen in EU-Mitgliedstaaten und EFTA Staaten sind steuerlich in Luxemburg abzugsfähig
  July 2009
  
  
• Changes to the tax consequences of fund mergers under the German Investment Tax Act
  The Upper House of the German parliament (Bundesrat) has adopted on Friday, 10 July 2009 a revision of the Investment Tax Act. Under the new rules, mergers of or with funds in the form of a SICAV can also benefit from a tax neutrality on investor level.
  Deutsche Fassung: Änderung der steuerlichen Konsequenzen bei Verschmelzungen von Investmentfonds nach dem Investmentsteuergesetz
  July 2009
  
  
• Luxembourg is back on the OECD “white” list, dated July 8 2009
  According to the press release published today on the OECD’s website (Organisation for Economic Co-operation and Development), Luxembourg has officially been removed from the OECD “grey” list of “non cooperative jurisdictions” (i.e. jurisdictions that have committed to the internationally agreed tax standard, but have not yet substantially implemented it).
  July 2009
  
  
• Luxembourg signs Protocols amending Double Tax Treaties with the U.S. as well as with other countries
  On May 20, Luxembourg Minister for the Treasury and Budget, Luc Frieden, and US Ambassador to Luxembourg, Anne Wagner, signed a protocol amending the April 3, 1996 double tax convention between both countries by introducing a revised article 28 for information sharing in compliance with OECD (Organization for Economic Co-operation and Development) standards. This agreement represents the second - out of nine recent agreements - which abides by OECD standards on international tax cooperation. This is also the first one entered into with an OECD and G-20 member further to the announcement made by Mr. Frieden on March 13, 2009 regarding the commitment by the Luxembourg government in this respect while maintaining compatibility with its bank secrecy rules.
  July 2009
  
  
• The Research, Development and Innovation Act dated 5 June 2009
  Luxembourg Parliament just passed new legislation to promote research and innovation in order to encourage businesses to develop their innovation potential. The new legislation is effective 1 July 2009
  Version française : Loi du 5 juin 2009 concernant la promotion de la recherche, du développement et de l’innovation
  Deutsche Fassung: Gesetz vom 5. Juni 2009 über die Förderung der Forschung, Entwicklung und Innovation
  July 2009
  
  
• Standard Chart of Accounts
  The law dated December 19, 2002 (“the Accounting law”) prescribed the use of a detailed chart of accounts, and updated the “Code de Commerce” accordingly, although the publication of this chart of accounts was left for a future Grand-Ducal Regulation (“GDR”). The release of the long awaited chart of accounts is a major step in the on-going modernisation of the financial reporting and of the accounting rules in Luxembourg which began in 2002. In the near future, it should result in the creation of a “Centrale des Bilans” in Luxembourg. In addition, the Luxembourg authorities have decided to use the “Plan Comptable Normalisé” or “PCN” as a working tool as part of their policy to reduce administrative burdens faced by Luxembourg companies.
  Version français: Plan Comptable Normalisé
  Deutsche Fassung: Standard-Kontenplan
  June 2009
  
  
• The Aberdeen case (ECJ/C-303/07/June 18, 2009) Discriminatory EU withholding tax on dividends ruled illegal by European Court
  Investment funds can claim millions back in overpaid dividend withholding tax from governments across Europe, following a European Court of Justice (ECJ) ruling that a Finnish tax withheld on dividends paid to foreign investment funds is considered illegal.
  The ruling in the case of Aberdeen Property Fininvest Alpha Oy is one of the first cases in the European Courts to consider the legality of an EU member state levying dividend withholding taxes only on dividends paid to non-resident investment funds while exempting domestic investment funds from such taxes.
  Deutsche Fassung: Das EUGH-Urteil Aberdeen gegen Finnland (EUGH/C-303/07/18 Juni 2009): Der Europäische Gerichtshof bestätigt, dass diskriminierende Kapitalertragsteuern innerhalb der EU auch bei Zahlungen an Investmentfonds gegen Gemeinschaftsrecht verstoßen
  June 2009
  
  
• Luxembourg Signs Protocol - Amending Double Tax Treaty with the U.S.
  On May 20, Luxembourg Minister for the Treasury and Budget, Luc Frieden, and US Ambassador to Luxembourg, Anne Wagner, signed a protocol amending the April 3, 1996 double tax convention between both countries by introducing a revised article 28 for information sharing in compliance with OECD (Organization for Economic Co-operation and Development) standards. This agreement represents the second in its kind - next to the recently signed tax treaty with the Kingdom of Bahrain – which abides by the OECD standards on international tax cooperation, and the first one concluded with an OECD and G-20 member further to the announcement made by Mr. Frieden on March 13, 2009 regarding the commitment by the Luxembourg government in this respect while maintaining compatibility with its bank secrecy rules.
  May 2009
  
  
• Luxembourg – India double tax treaty voted on by Luxembourg Parliament
  After several years of negotiation, the Luxembourg Government signed a Double Tax Treaty (DTT) with India on 2 June 2008. The DTT was voted on by Luxembourg Parliament on 6 May 2009 and should enter into force once the notification process is completed in both States. Then, the DTT’s provisions will be effective as from (i) tax years beginning on or after 1 April of the year following the entry into force of the DTT with respect to Indian taxes and (ii) tax years beginning on or after 1 January of the year following the entry into force of the DTT with respect to Luxembourg taxes.
  May 2009
  
  
• Luxembourg – UAE double tax treaty voted on by Luxembourg Parliament
  After several years of negotiation, the Luxembourg Government signed a Double Tax Treaty (DTT) with the United Arab Emirates (UAE) on 20 November 2005. Luxembourg Parliament just passed the bill into law on 29 April 2009.
  Deutsche Fassung: Abstimmung des luxemburgischen Parlaments über das Doppelbesteuerungsabkommen Luxemburg – VAE
  April 2009
  
  
• Summary of recent Luxembourg government’s statements on tax-related matters
  Current political discussions seek to achieve a legitimate goal: fight against “tax havens” and tax fraud against a background of financial and economic turmoil. The Luxembourg authorities have made clear over the last six months that they were fully willing to cooperate in the fight against tax fraud while they remain determined to enhance Luxembourg's tax competitiveness. Luxembourg Premier Jean-Claude Juncker confirmed this in his State of the Nation Address held before Luxembourg Parliament on 21 April 2009. Today, the Luxembourg authorities pride themselves on the fact that G20 member states have come to understand the Luxembourg regime better and have managed to avoid the confusion which arose in the past.
  April 2009
  
  
• Luxembourgish government measures for economic recovery
  On March 6, 2009, the government approved a set of substantial measures, complementary to the first package of measures, in order to minimize the impact of the crisis and prepare the country to bounce back from it. As such, the following bills were submitted:
  Bill proposing a temporary aid system for economic recovery (n° 6003)
  French version: Mesures de relance économique du gouvernement Luxembourgeois
  March 2009
  
  
• Significant VAT refund opportunities - HMRC concedes on 3 year capping Claims invited for overpaid output tax in addition to underclaimed input tax
  HM Revenue and Customs (HMRC) has issued Revenue & Customs Brief 07/08 inviting taxpayers to submit retrospective claims for VAT overpaid prior to the introduction of the current three-year cap. All affected businesses should now identify, quantify and submit their claims as soon as possible.
  February 2009
  
  
• Luxembourg – Hong Kong double tax treaty is now in force
  As mentioned in our previous Flash News dated 10 December 2008, Luxembourg Parliament voted the Double Tax Treaty (DTT) between Luxembourg and Hong Kong on 19 December 2008.
  The ratification process having finally being completed by both countries on 20 January 2009, the DTT has now entered into force.
  February 2009
  
  
• Luxembourg - Corporate Tax reform for 2009 – Further update
  As mentioned in our previous Flash News Alert dated 17 December 2008, Luxembourg Parliament introduced a significant number of new tax measures in the law of 19 December 2008 (the "Law").
  January 2009
  
  
• Zusammenarbeit zwischen Behörden und Massnahmen zur Bekämpfung von Steuerbetrug und -hinterziehung
  Am 17. Dezember 2008 verabschiedete das Luxemburger Parlament den Gesetzentwurf Nr. 5757.
  January 2009
  
  
• Annual Tax Law passed the Upper House of the German Parliament
  The Annual Tax Law 2009, as adopted by the Bundestag (the Parliament’s Lower House) on 28 November 2008, passed the Upper House. It contains a number of changes which are relevant to the Investment Management Industry.
  Deutsche Version: Jahressteuergesetz 2009 vom Bundesrat verabschiedet
  December 2008
  
  
• Cooperation among authorities and measures to combat tax fraud and tax evasion Bill no. 5757
  Luxembourg Parliament passed bill no. 5757 into law on 17 December 2008.
  December 2008
  
  
• Luxembourg - Corporate Tax reform for 2009
  On 16 December 2008, Luxembourg Parliament enacted the 2009 tax reform by adopting the various tax measures provided for in bills no. 5924 and 5913.
  Deutsche Version: Luxemburg – Unternehmenssteuerreform in 2009
  December 2008
  
  

• Luxembourg – Hong Kong double tax treaty: ratification process in progress in Luxembourg
  The Luxembourg government launched the ratification process of the Double Tax Treaty (DTT) signed with Hong Kong on 2 November 2007, by submitting the bill to the approval of the Luxembourg Parliament on 4 April 2008. The Luxembourg Parliament just passed the bill into law on 10 December 2008.
  December 2008
  
  
• Abgeltungsteuer – Ausweitung der besonderen Übergangsbestimmungen für Spezialfonds und steueroptimierte Geldmarktfonds
  Im Schreiben vom 22. Oktober 2008 hat das Bundesministerium der Finanzen (BMF) die bereits für Spezialfonds bestehenden Einschränkungen des Bestandsschutzes in Bezug auf die Abgeltungsteuer auch auf andere Investmentvermögen ausgeweitet.
  English Version: German Flat Rate Tax – Extension of the specific transition rules for specialised investment funds and tax-optimised money market funds
  November 2008
  
  
• Qualified Intermediaries: US reporting and compliance alert: Proposed changes to QI agreement and QI audit guidelines
  On October 14, 2008, the US tax authorities (IRS) announced changes to the QI agreement as well as to the QI audit guidelines. At a conference organized by the British Bankers’ Association on October 16, 2008, Senior Executives of the IRS explained the proposed rules and provided further information on current discussions. In addition, the IRS announced the release of new draft rules on reporting and withholding before the year end.
  October 2008
  
  
• Luxemburg - Haushaltsentwurf 2009 und neue steuerliche Maßnahmen
  Am 1. Oktober legte die luxemburgische Regierung dem Parlament einen Gesetzesentwurf zu verschiedenen steuerlichen Maßnahmen vor (realisiert durch den Haushaltsentwurf und durch ein gesondertes Gesetz). Der Gesetzesentwurf bestätigt einerseits die bisherigen Ankündigungen des luxemburgischen Ministerpräsidenten, die dieser im Mai diesen Jahres in der traditionellen „Rede zur Lage der Nation“ gemacht hatte. Darüber hinaus enthält der Entwurf weitere steuerliche Maßnahmen, die für die Wirtschaft von wesentlicher Bedeutung sind.
  October 2008
  
  
• New Tax Measures for Individuals in the Pipeline
  In the state of the nation address given on 22 May 2008, Luxembourg Prime Minister Jean-Claude Juncker had announced that taxes would be lowered. This bill confirms the announcement and provides for a number of individual tax measures. There is more good news (for now?): taxes on company cars made available to employees will not be increased under the bill.
  Version française: Nouvelles mesures fiscales envisagées
  October 2008
  
  
• Luxembourg – Draft 2009 budget and new tax measures
  On 1st October, the Luxembourg government put forward to
  Parliament a proposal for new tax measures (provided for in the
  draft budget and in a separate bill). This proposal confirms
  some of the previous announcements made by the Luxembourg
  Prime Minister in the traditional "state of the nation" address
  given in May 2008.
  October 2008
  
  
• Abschaffung der Luxemburger Gesellschaftsteuer
  Das Luxemburger Finanzministerium hat dem Parlament einen Gesetzesentwurf zur Umsetzung der EU Richtlinie vom 12. Februar 2008 (Richtlinie 2008/7) bezüglich der indirekten Steuern auf die Ansammlung von Kapital (“droit d’apport”) vorgelegt. Nach dem Entwurf soll die Gesellschaftsteuer in Luxemburg ab dem 1. Januar 2009 abgeschafft werden.
  September 2008
  
  
• Abolition of capital duty in Luxembourg: another step forward!
  The Luxembourg authorities are currently preparing a bill in order to transpose the EU capital duty Directive of 12 February 2008 (Directive 2008/7/EC) into Luxembourg domestic legislation. According to the draft bill (in its current version as of to date which has not yet been presented to Parliament), capital duty would be repealed in Luxembourg as from 1 January 2009.
  September 2008
  
  
• Regulation suggestions of the Federal Ministry of Finance on the taxation of "Insurance mantles"
  We have been aware that some suggestions were made by the Federal Ministry of Finance (BMF) for amending the taxation of life insurance contracts. The BMF has targeted contracts that are commonly referred to as "Life insurance wrappers".
  September 2008
  
  
• Qualified Intermediaries: US reporting and compliance alert
  The QI program has recently been the focus of several discussions involving the IRS, ths US legislator and some international accounting firms.
  August 2008
  
  
• Changes to the tax regime governing directors' fees
  Version française: Tantièmes : modification du régime fiscal
  In a recently-issued circular (Circular LIR 94/4, hereafter "The Circular"), the Luxembourg tax authorities have introduced a scheme under which operational expenses connected with directors' fees may be deducted on a lump-sum basis.
  July 2008
  
  
• 10% Taxation for interest income: from private investments (amendments to the so called Relibi law).
  The Luxembourg parliament passed a bill in a first reading to amend the so-called "Relibi law" of the 23 December 2005 on the taxation of interest income recieved by individuals resident in Luxembourg.
  June 2008
  
  

• Luxembourg – Losses of EU Permanent Establishments - Update
  On 15 May 2008, the European Court of Justice (ECJ) ruled in the Lidl Belgium case (C-414/06) that it is not contrary to EC law for a company located in one Member State (MS) not to be able to deduct the losses incurred by its Permanent Establishments (PE) situated in another MS, where, by virtue of a double tax treaty (DTT), that PE’s income is taxed in the latter MS and the losses can be carried forward against that PE’s income in future accounting periods.
  June 2008
  
  
• Luxembourg 2009 budget announcement
  Luxembourg Prime Minister Jean-Claude Juncker gave his traditional state of the nation address.
  May 2008
  
  
• Chamber of commerce contributions
  In a decision dated 17 April 2008 (n°23755C), the administrative court confirmed the first instance judgment of 24 October 2007 (n°22636) that invalidated a notice of assessment from the Chamber of Commerce.
  April 2008
  
  
• Luxembourg – Losses of EU Permanent Establishments
  The Advocate General’s (AG) opinion in the recent Lidl Belgium case brought before the EU Court of Justice (“ECJ”) may provide taxpayers with new arguments to claim cross-border relief and ask for the deduction of tax losses generated by their EU permanent establishments at head office level.
  March 2008
  
  
• Flash News: New VAT rules on VAT representation: Adoption and publication of the Law and Grand- Ducal Regulation
  Further to the publication on February 28, 2008 of the law dated February 23, 2008, a new article 66bis introduces the system of tax representation for VAT purposes into Luxembourg VAT legislation.
  March 2008