Luxembourg 2020 Budget Law voted — Pre-2015 rulings no longer binding as of the end of the fiscal year 2019.
The Bill n°7500 related to the 2020 Budget Law was approved by the Luxembourg Parliament on December 19, 2019.
According to the 2020 Budget Law, all advance tax agreements (or rulings) issued before January 1, 2015, by the Luxembourg tax authorities will no longer apply after the end of the fiscal year 2019 (i.e. tax treatments detailed in pre-2015 rulings are still applicable in the tax returns 2019 provided that the facts described therein, the applicable law and case laws did not change meanwhile).
As from the fiscal year 2020, pre-2015 rulings cannot be relied upon although any tax treatment described therein, and which is in line with the current legislation in force should continue to apply.
Taxpayers affected by the above decision can submit a new request under the new ruling procedure which has been codified and is applicable since January 1, 2015. Obviously, the Luxembourg tax authorities will examine the new request considering all recent developments in the tax area (national, European Union or international law).
In their Newsletter issued on December 3, 2019, the Luxembourg tax authorities have provided further guidance on how to renew such pre-2015 rulings in case the transactions described in the terminated pre-2015 ruling will continue to produce their effects in the future (or have not yet produced their effects).
Consistent with the advance tax agreements approved under the new ruling procedure since January 1, 2015, the new measure will ensure that going forwards all rulings issued by the Luxembourg tax authorities will comply with the same requirements as detailed in paragraph 29a of the General Tax Law or Loi Générale des Impôts and the Grand Ducal Decree of December 23, 2014 (e.g. the ruling request must be substantiated, it must include a summary based on the template issued by the dedicated ruling commission or Commission des Décisions Anticipées and a sworn statement, the approved ruling will be binding for five years, etc.).
As to the timing, the new ruling request should be submitted before the closing of the fiscal year 2020 in order to be applicable in the tax returns 2020 onward.
Taxpayers should contact their tax advisor to discuss potential consequences of the termination of their pre-2015 rulings and to assess whether a new ruling is necessary.
Should you have further questions please contact Christine Ntumba (Tax Partner):
Phone (Lux) : +352 26 20 37 51
SAGNARD & ASSOCIE