On December 19th 2017, the Minister of Finance of Luxembourg presented a draft bill to Parliament to amend the law of November 25th 2014, as regards the procedure applicable to the exchange of information on request (the “Draft Law”). The purpose of the Draft Law is to give full effect to the decision of the Court of Justice of the European Union (“ECJ”) in the “Berlioz” case rendered on May 16th 2017 (“Berlioz Case” see BSP legal alert).
Until now, the Luxembourg tax authorities were only required to review a request with regards to its compliance with the formal conditions provided for in the relevant tax treaty or other applicable law. They were not obliged to verify the foreseeable relevance of the request. The Draft Law creates an obligation on the tax authorities to verify that the condition of foreseeable relevance is met before sending an order, to provide the information, to the holder of the requested information.
Furthermore, in view of the recent criticisms levelled by the Berlioz Case regarding the lack of an effective judicial remedy as required by the Charter of Fundamental Rights of the European Union, the Draft Law re-establishes a complete judicial remedy, i.e. an action for annulment against the request for information which, according to the taxpayer concerned, does not meet the principle of foreseeable relevance. This second amendment will mean that the Luxembourg courts will have to rule on the legality of the request, whereas previously, the taxpayer could only appeal against the fine that could be charged if he did not provide the requested information.
Regarding the procedure, appeals must be lodged within one month of notification of the request to the holder of the requested information. The Draft Law provides that the Luxembourg courts will have access to the request for exchange of information in order to determine whether the request for information meets the foreseeable relevance condition.
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