2019 Tax news review

The tax watch series below features the major tax events that occurred in 2019:

• Entry into force of the new double tax treaty between Luxembourg and France on 19 August 2019 : For more information, see our Newsflash of 3 July 2019. See also our Newsletter of December 2019 regarding the amendments to this new treaty.
• Guidelines on the new IP regime released by the Luxembourg tax authorities: based on the new approach named “Nexus”, only revenues that are directly related to qualifying expenditures can benefit from the exemption. For more information, see our Article of 9 July 2019.
• Entry into force of the OECD Multilateral Instrument (“MLI”) for Luxembourg on 1 August 2019: Related to the Base Erosion and Profit Shifting OECD Action Plan (“BEPS”), the MLI automatically implements a series of tax treaty measures between signatories without any individual renegotiation. For more information on the MLI provisions and when they will become effective, see our Newsletter of May 2019. 
• Termination of tax rulings issued before 2015: Rulings issued by the Luxembourg tax authorities before 1 January 2015 ceased to be binding from 1 January 2020. For more information, see our Newsletter of December 2019.
• Law on tax dispute resolution mechanism: the Law of 20 December 2019 transposed EU Directive 2017/1852 dated 17 October 2017 on tax dispute resolution mechanisms in the EU into domestic law (“Law”). This legislation had been submitted to Parliament on 11 April 2019 as Bill n°7431 (“Bill”). For more information on the content of the Bill, please refer to our Newsletter of June 2019. Unlike the Bill, the Law may apply to questions in dispute relating to income or capital earned in a fiscal year commencing before 1 January 2018, subject to an agreement between the Administration des Contributions Directes and the other relevant competent tax authority(es) involved.
• Law on anti-hybrid rules voted: On 20 December 2019, Luxembourg published the Law on anti-hybrid rules which transposed the Council Directive (EU) 2017/952 of 29 May 2017 (“ATAD 2”) into Luxembourg law. For more information, please refer to our Newsflash of 19 December 2019.