On 21 March 2020, the Luxembourg Parliament adopted the law implementing Directive (EU) 2018/822 (“DAC 6”) which introduces new reporting obligations on Luxembourg intermediaries that design, market or implement reportable cross-border tax arrangements. These reportable arrangements are identified according to certain “hallmarks” which may, in some cases, be combined with a main benefits test (please refer to our April 2018 and August 2019 newsletters for further details).
In light of concerns expressed by the Luxembourg Council of State, the draft law was amended prior to adoption. These amendments concerned in particular the scope of the exemption for certain intermediaries subject to professional confidentiality. As a result of the amendments, lawyers governed by article 35 of the amended law of 10 August 1991, chartered accountants governed by article 6(1) of the amended law of 10 June 1999 and audit professionals are exempted from all reporting obligations to the Luxembourg tax authorities. In practice, these exempt intermediaries will be required to notify other intermediaries (or, in the absence of an intermediary, the taxpayer himself) of their obligation to report a tax arrangement. The taxpayer may nonetheless mandate an exempt intermediary to report a transaction on his behalf.
The Law will enter into effect on 1 July 2020 with retroactive effect for reportable tax arrangements whose first step was implemented between 25 June 2018 and 30 June 2020. These reportable tax arrangements must be reported by 31 August at the latest.
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