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Luxembourg Issues Guidance On DAC6 Tax Scheme Reporting

by Ulrika Lomas,, Brussels

28 May 2020

Luxembourg's Direct Tax Administration (ACD) has issued guidance covering various aspects of the European Union sixth Directive on Administrative Cooperation (DAC6), under which intermediaries are required to report cross-border tax planning arrangements.

DAC6 (EU Directive 2018/822) requires intermediaries – such as tax advisors, accountants, banks, and lawyers – to report relevant arrangements before they are used. The aim is to provide EU member states with more information on the tax planning schemes that intermediaries design and market, so that they can assess whether the schemes facilitate tax evasion and avoidance before they are implemented.

Member states' tax authorities are also required to exchange data on tax planning arrangements on an automatic basis.

These requirements are transposed into Luxembourg's legal framework by a law of March 25, 2020.

According to the guidance, information to be sent to the ACD under the law includes the following:

  • The identification of the intermediaries and taxpayers concerned, including their name, date and place of birth (for natural persons), their tax residence, and their tax identification number;
  • Detailed information on the hallmarks listed in the annex to the law, according to which the cross-border system must be declared;
  • A summary of the content of the cross-border scheme to be declared, including a reference to the name by which it is commonly known, if any, and a description of the relevant business activities in a manner that does not lead to the disclosure of a commercial, industrial or professional secret;
  • The date on which the first stage of the scheme will be implemented;
  • Detailed information on the legal provisions on which the cross-border scheme to be declared is based upon;
  • The value of the cross-border scheme;
  • The identification of the member state of the taxpayer(s) concerned as well as of any other member state likely to be involved with the cross-border scheme; and
  • The identification of any other person likely to be affected by the cross-border scheme, and the member states to which they are linked.

The guidance also includes information on the following:

  • Deadlines for the transmission of information reports to the ACD, including in situations where professional secrecy is involved;
  • The timeframes for information exchange with other countries' competent authorities; and
  • How data may be transmitted to the ACD.

The DAC 6 rules will enter into force on July 1, 2020, and apply to reportable arrangements dating back to June 25, 2018.

TAGS: tax | business | value added tax (VAT) | tax avoidance | law | Luxembourg | tax planning | transfer pricing | Europe | Tax | BEPS

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