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Luxembourg Tax News 2015-17

Luxembourg Tax News 2015-17



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BEPS | EU Tax Transparency – Staying informed

Update May / June 2015  

In order to help you stay informed and ahead of the curve on preparing for the potential tax landscape changes, we have summarized below some of the most important tax developments that happened – between May and June this year - at OECD, EU or country level, in the area of tax transparency and the fight against tax avoidance.

OECD BEPS Action Plan - Deliverables marching on

Since the release of our last newsletter (Luxembourg Tax News 2015-13), the OECD continued its release of discussion drafts and public consultations in connection with its Base Erosion and Profit Shifting (BEPS) Action Plan.


Action 6 – Prevent treaty abuse

On 22 May, the OECD released a revised discussion draft on proposals for addressing the follow-up work on action 6 (prevent treaty abuse) under the BEPS project. This is the third discussion draft related to BEPS Action 6. On June 18 the OECD released the related comments received.

For more information: see the OECD release.


Action 7 – Prevent the artificial avoidance of PE Status

After the release on 15 May 2015 of a revised discussion draft of Action 7 (prevent the artificial avoidance of PE status) under the BEPS project, the OECD released on 15 June 2015 public comments received.


Action 8 - Cost contribution arrangements and hard-to-value intangibles

In April and June, the OECD released two discussion drafts concerning:

Cost contribution arrangements. As noted in the OECD release, BEPS Action 8 requires the development of "rules to prevent BEPS by moving intangibles among group members" and involves updating the guidance on cost contribution arrangements. The related public comments received were published on 1 June
Hard-to-value intangibles. (See the OECD release). The discussion draft identifies that work needs to be undertaken to develop “transfer pricing rules or special measures for transfer of hard-to-value intangibles The related public comments received were published on 19 June

Action 13: Implementation package for BEPS country-by-country reporting

On 8 June 2015, the OECD released a package for implementation of a new country-by-country reporting plan developed under Action 13.

The new implementation package consists of model legislation requiring the ultimate parent entity of an MNE group to file the country-by-country report in its jurisdiction of residence, including backup filing requirements when that jurisdiction does not require filing. The package also contains three Model Competent Authority Agreements to facilitate the exchange of country-by-country reports among tax administrations.

For more information: see the OECD release.


Action 15: Developing BEPS multilateral instrument

The OECD announced on 28 May 2015 that work has begun on the development of a multilateral‎ instrument to implement the tax treaty-related BEPS project. The BEPS project set out 15 actions, many of which cannot be addressed without amending bilateral tax treaties.

The ad hoc Group that will complete the work under Action 15 has been established, with over 80 countries participating. The substantive work will then begin at an Inaugural Meeting which will take place on 5-6 November 2015.

For more information: see the OECD release.

BEPS measures – Local implementation phase: watch out!

Australian Federal Budget 2015: Tax Integrity Measures

The Australian government has proposed a highly targeted approach to the perceived problem of profits from Australian sales flowing through to nil or low tax jurisdictions. Two Exposure Drafts were released on 12 May 2015 addressing Multinational Anti-Avoidance Law and GST and Digital Products. The focus of the new test will be on whether the arrangements are principally tax driven or commercially based.

Key insights

  • A multinational anti-avoidance provision is proposed and designed to apply to large multinational enterprises

  • Increased penalties both in relation to the operation of the anti-avoidance provision and transfer pricing adjustments involving large companies

  • A 10 percent GST applicable to intangibles and services imported by Australian resident end-users

  • Implementation of Country-by-Country reporting and related OECD transparency proposals

  • Consultation process for greater public transparency of the taxation position of large companies

Additional information on the Federal Budget can be found here (PDF, 1MB).


U.S. Treasury’s proposed revisions to U.S. Model Tax Convention

The Treasury Department released on 20 May 2015 drafts of the five proposed revisions to the U.S. Model Tax Convention for public comment:

  • Proposed treaty rule addressing so-called “exempt permanent establishments”
  • Proposed treaty rules addressing payment by “expatriated entities”
  • Proposed treaty rules addressing “special tax regimes”
  • Proposed limitation on benefits treaty article
  • Proposed treaty article addressing subsequent changes in law

Additional information can be found in the KPMG US Tax news flash related to the Treasury release.

EU – Tax transparency

Tax rulings

Estonia, Poland

On 8 June, the European Commission (EC) announced that two injunctions have been issued to Estonia and Poland, with instructions for these countries to deliver information on their tax ruling practice within one month. Previous information requests to Estonia and Poland were sent as part of the EC’s focus on national tax ruling practice as applied to all EU Member States.


Requests for specific tax rulings from other countries

The EC also asked 15 EU Member States to provide a substantial number of specific (individual) tax rulings. Letters requesting individual tax rulings were sent to Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, Lithuania, Portugal, Romania, Slovakia, Spain, and Sweden. Previously, the EC has already requested individual tax rulings from Cyprus, Ireland, Luxembourg, Malta, the Netherlands, and the UK.

For more information, click here


EU Action Plan

On 17 June, the EC presented an action plan that would reform corporate taxation in the EU, and that would set forth a series of initiatives to address tax avoidance, secure sustainable revenues, and strengthen the EU single market for businesses.

The EC action plan is intended to improve the corporate tax environment in the EU, making it fairer, more efficient and more growth-friendly.

5 Key Areas for action have been identified:

  • Re-launching the Common Consolidated Corporate Tax Base (CCCTB)
  • Ensuring fair taxation where profits are generated
  • Creating a better business environment
  • Increasing transparency
  • Improving EU coordination

The EU measures would also be developed to complement the OECD BEPS project, but will be shaped to meet the EU's own particular challenges and needs.

For more information: see EuroTaxFlash (PDF, 90KB).


For further information, please do not hesitate to contact us.





Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing, or recommending to another party any matters addressed herein.The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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