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Luxembourg Tax Alert 2019-06

Luxembourg Tax Alert 2019-06



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Multilateral Instrument: deposit of the ratification instrument with the OECD

On 9 April 2019, Luxembourg filed with the OECD its ratification instrument with respect to the list of reservations and notifications made on the Multilateral Instrument (‘MLI’). 


On 14 February 2019, the Luxembourg Parliament passed the law on the ratification of the MLI into Luxembourg domestic tax law.

As per the MLI ratification process, Luxembourg has now filed its ratification instrument with the OECD in order for the MLI to enter into force.

Impact on Luxembourg-covered tax agreements

The timing of the application of the MLI and related matching provisions must be considered; in particular, the following two dates are critical:

  1. Entry into force of the MLI

    For the Contracting States that have already ratified the MLI, its entry into force will be on the first day of the month following three calendar months after the ratification by Luxembourg. This implies that for those Covered Tax Agreements (‘CTAs’), the MLI should enter into force on 1 August 2019.

  2. Entry into effect of the provisions
  • For withholding taxes, the entry into effect of the MLI provisions will be on or after the first day of the next calendar year that begins on or after the entry into force. As a result, the matching provisions should be applicable by 1 January 2020.

  • For all other taxes, the MLI provisions will apply to taxable periods beginning on or after the expiration of six calendar months from the date of entry into force, i.e. taxable beginning on or after 1 February 2020. This means that in the case of taxpayers having a taxable period that follows the calendar year, the MLI provisions would be applicable by 1 January 2021 only.

KPMG Luxembourg comment

The timing of application of the MLI provisions will have to be closely monitored on a country-by-country basis, depending on the date of ratification by the other Contracting States (see the OECD list of signatories and parties) and on the type of tax concerned, i.e., withholding tax or other taxes.

The above-mentioned dates of effect are the earliest possible dates of effect for the CTAs with Luxembourg. As of 9 April 2019, those dates of effect would apply to the CTAs concluded between Luxembourg and the following 21 countries that have already ratified and filed their own ratification instrument: Austria, Finland, France, Georgia, Guernsey, Ireland, the Isle of Man, Israel, Japan, Jersey, Lithuania, Malta, Monaco, the Netherlands, Poland, Serbia, Singapore, the Slovak Republic, Slovenia, Sweden, and the UK.

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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