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Luxembourg: DAC 6 transposition, Protocol with France

Luxembourg: DAC 6 transposition, Protocol with France

The Luxembourg Parliament on 21 March 2020 passed the following legislation:


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  • A bill to transpose the amended European Union (EU) directive on administrative cooperation in the field of taxation (DAC 6) into Luxembourg domestic tax law
  • A bill to ratify a Protocol to amend the existing income tax treaty between Luxembourg and France

DAC 6 introduces a new obligation for EU intermediaries—and certain taxpayers—to disclose certain cross-border arrangements to local tax authorities, and that information is then to be shared with other EU tax authorities.

The Protocol, signed in October 2019, proposes to modify the French method of eliminating double taxation in Article 22 of the France-Luxembourg income tax treaty (2018). The change would affect cross-border residents who live in France but are paid an income in Luxembourg; they would no longer use the method of imputation of the Luxembourg tax, but would instead apply an exemption. In other words, the allocation of tax credits against French tax would not correspond to the Luxembourg taxes on Luxembourg source income. The Protocol anticipates that the tax credit applied would correlate to the amount of French tax corresponding to the income received in Luxembourg (which is the equivalent to an exemption from this income in France).

Read a March 2020 report prepared by the KPMG member firm in Luxembourg

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