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On 28 March 2023, the government presented Bill of Law 8186 ("Bill"), which provides a set of amendments to the General Tax Law (Abgabenordnung, AO) dated 22 May 1931 and introduces new procedural aspects applicable to taxpayers.[1] The Bill also introduces new bilateral and multilateral advance pricing agreement procedures, together with the possibility to issue, withdraw or amend a tax assessment further to a mutual agreement procedure (MAP) or an arbitration decision. Lastly, the Bill proposes a transfer pricing (TP) documentation requirement for transactions between associated enterprises, while further details regarding the scope, exact content and magnitude will be unveiled soon in a coming grand ducal decree.
The changes will be applicable once the law is published in the memorial, except for some that will be applicable either as of 1 January 2024 or fiscal year 2024.
For further information and to discuss what this development might mean for you, please get in touch with your usual Baker McKenzie contact.
The most important changes are the following:
The AO is an old piece of Luxembourg legislation that required an in-depth revamp and a repeal of certain obsolete provisions. The Bill brings welcome amendments and clarifications, as it will harmonize and modernize the general procedure applicable to taxpayers, especially with respect to APAs, MAPs and electronic documentation. Further guidance is expected regarding TP documentation requirements and the possibility of paying tax claims in installments in certain circumstances.
1 In principle, all government and Parliament bills must go through two successive votes by the Chamber on the law as a whole. There must be an interval of at least three months between the two votes. However, Parliament may exempt itself from the second vote to the extent that the Council of State agrees with this exemption, which is most often the case in practice
2 OECD (2017), Model Tax Convention on Income and on Capital: Condensed Version 2017, OECD Publishing, Paris, https://doi.org/10.1787/mtc_cond-2017-en. Commentaries 52
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