Accordingly, the Law requires that the following Luxembourg-based multinationals disclose through a specific report ("Report") the corporate income tax that they pay by country: Luxembourg ultimate parent and standalone undertakings with revenues over EUR 750 million for each of the last two consecutive financial years, as well as Luxembourg medium-sized and large subsidiary undertakings controlled by a non-EU ultimate parent whose consolidated revenue exceeds EUR 750 million on its balance sheet date for each of the last two consecutive financial years, as shown in its consolidated financial statements.1 The provisions of the Law apply from the opening date of the first financial year starting on or after 22 June 2024.
For further information on what these developments mean for your organization, please get in touch with your usual Baker McKenzie contact.
Scope
The Law applies to the following entities:
- Private and public limited liability companies (SARL and SA) and partnerships limited by shares (SCA)
- General (SNC) and common limited partnerships (SCS), when their direct or indirect partners that are indefinitely liable are organized as limited liability companies or similar entities
- Branches opened in the Grand Duchy of Luxembourg by multinational groups or standalone companies established outside the EU
Report's content
The following information must be disclosed in the Report:
- Name of the ultimate parent or the standalone undertaking, the financial year concerned and the currency used
- Nature of the activities
- Number of employees
- Total net turnover made
- Profit made before tax
- Amount of income tax due in the country based on the profits made in the current year in that country
- Amount of tax actually paid during that year
- Accumulated earnings
Where and when to publish
The Report should be made accessible on the public registry of the relevant member state (e.g., Luxembourg Trade and Companies Register or RCS for Luxembourg) within 12 months after the date on the balance sheet for the financial year for which the Report is drawn up. It should also be made accessible on the company website free of charge for a minimum of five consecutive years.
Exemption
Companies may be exempted from the obligation to publish the Report on their website if the Report has been made available to the public in a machine-readable electronic format on the website of the commercial register (the RCS) free of charge and to any person located in the European Union. The companies' and branches' websites must then contain information on the exemption and refer to the website of the commercial register concerned.
Deferral
The Public CbCR Directive contains a "safeguard clause" that the Grand Duchy of Luxembourg has chosen to select.
As a result, companies may defer the publication of certain information for a maximum period of five years if its publication would seriously damage the commercial position of the companies to which it relates.
If companies defer the disclosure of commercially sensitive information, they are obliged to explain the deferral in the Report, and the information omitted should be disclosed in a later Report.
This clause is not applicable when the information pertains to noncooperative jurisdictions for tax purposes.
Statutory auditor check
When the accounts of an in-scope Luxembourg law-governed entity are required to be audited by a statutory auditor, the audit report will have to indicate whether the company was required to publish a Report the financial year preceding that for which the audited accounts were prepared and, if so, whether the statement has been published.
Penalties
Board members of the in-scope entities are collectively responsible for ensuring that the reporting obligations are met. Failure to comply with these obligations can result in a fine between EUR 500 and EUR 25,000.
1 Luxembourg branches of non-EU undertakings must also comply if: (i) they are Luxembourg branches of a non-EU affiliated undertaking of a group with a non-EU ultimate parent or they are Luxembourg branches of a non-EU standalone undertaking with revenue exceeding EUR 750 million on the balance sheet date for each of the last two consecutive financial years, as reflected in its (consolidated) financial statements; and (ii) the net turnover of the Luxembourg branch has exceeded EUR 8.8 million for each of the last two consecutive financial years.
