Pursuant to the speech on the state of the nation held by Prime Minister Xavier Bettel on 8 October 2019, Bill n°7500 on the 2020 budget (the Bill) was published on 14 October 2019.
While most of the tax provisions in the Bill are of limited importance for the Luxembourg financial centre, there is one specific provision concerning advance tax agreements (formerly known as tax rulings) that may have a substantial impact on structures set up before 2015. Advance tax agreements granted before 1 January 2015 are, as of today and according to the former practice of the Luxembourg tax administration, not limited in time. Article 5 of the Bill provides that such advance tax agreements will automatically become null and void as from the end of the 2019 tax year.
Taxpayers relying on advance tax agreements granted before 1 January 2015 will be able to benefit from the provisions of such agreements for the last time when filing their tax return for 2019. Afterwards, new advance tax agreement requests will have to be introduced in accordance with the new procedure laid down in article 29a Abgabenordnung, which has been applicable since 1 January 2015. This new procedure already contains a 5 year validity period for advance tax agreements; the Bill thus aims at harmonizing the two regimes that are currently co-existing.