Find out some of the most important measures affecting corporate taxpayers following the Luxembourg tax reform for 2017
Following the announcement of the tax reform in February and further clarifications presented in April, on 26 July 2016 the Luxembourg government lodged the draft law for the tax reform before the Luxembourg parliament. Once voted in, most of the measures are expected to enter into force from 1 January 2017 onwards (with some exceptions).
The reform is comprehensive and designed to create social fairness, increase competitiveness, and strengthen employment. It entails the introduction of a significant number of new tax measures concerning both corporate and individual taxpayers in the field of direct and indirect taxes. We have highlighted below some of the most important measures affecting corporate taxpayers. Measures concerning individuals are summarised in a separate newsletter.
Several measures are expected to be introduced in direct and indirect tax law in order to better fight tax fraud and money laundering. The purpose of the reform is notably to distinguish between three types of tax fraud: “simple” tax fraud, “aggravated” tax fraud, and tax evasion (“escroquerie fiscale”). Thus, the draft law introduces a new concept of “aggravated” tax fraud for direct and indirect tax purposes which would be considered a criminal offence.
Furthermore, the money laundering infraction would be extended to cases of “aggravated” tax fraud and tax evasion.
It is noteworthy that the undue reimbursement of VAT may also be sanctioned by the Luxembourg VAT authorities from 2017 onwards.
Among the various other proposed measures, one should note that the filing of a deliberately incomplete or incorrect direct tax return and the non-filing of direct tax returns should be subject to an administrative fine. The fine depends on the amount of the understated tax (or unduly reimbursed tax) and should range between 5% and 25% of that amount.
The draft law further provides that penalties that can be imposed in case of late filing of direct tax returns would be increased to a maximum amount of €25,000.
To enhance VAT compliance, the amount of certain administrative penalties shall be significantly increased beginning 2017.
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 endeavor 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.