On 13 July 2016, Luxembourg Parliament adopted the law on mandatory automatic exchange of information in the field of taxation (the “Law”). The Law implements the EU Council Directive 2015/2376 (the “Directive”) in Luxembourg domestic legislation and extends the scope of mandatory exchange of information on cross-border advanced tax confirmations (“ATC”) and advance pricing agreements (“APA”).
As a consequence, the Luxembourg tax authorities will, as from 1 January 2017, exchange information on ATCs and APAs with other Member States of European Union. The Law produces retroactive effects as the scope of mandatory exchange of information is extended to ATCs and APAs issued, amended or renewed as from the 1 January 2012 provided they were still valid on 1 January 2014.
The Law excludes from the scope of the mandatory exchange of information, ATCs and APAs that involve (i) exclusively natural persons or (ii) persons with a low turnover (below EUR 40 million during the tax year preceding issue of the ATC/APA at a group level). This second exception does not apply to persons carrying out mainly financial or investment activities.
Earlier this year, and prior to the adoption of the Directive, Luxembourg tax authorities had released a standardised form 777E with the information to be gathered and exchanged with other jurisdictions. The Luxembourg tax authorities, in anticipation to the European requirements and based on the Action 5 of the OECD action plan on Base Erosion and Profit Shifting (“BEPS”) which also proposes an exchange of information of advance tax rulings, has started to gather the necessary information on past ATCs and APAs and expects to finalise their communication by end of 2016.