DAC 6 implementation update

On 8 August 2019, the Luxembourg Government tabled a new Bill of Law 7465 (“Bill”) before the Luxembourg Parliament (Chambre des députés) implementing the so-called “DAC6” (EU Directive 2018/822 amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation in relation to reportable cross-border arrangements) into Luxembourg domestic law. DAC6 requires EU “intermediaries” (or taxpayers as the case may be) to report cross-border arrangements that strongly present a risk of tax avoidance or abuse.

Member States are required to implement DAC6 into their domestic law before 31 December 2019.

Currently, the legislative process to vote on the Bill is still ongoing. On 14 January 2020, the State Council presented no less than four formal objections to the Bill. It requires, inter alia, a full exemption of reporting for lawyers that are protected by legal client-attorney privilege (as opposed to a partial obligation of reporting on a no client’s name basis) but also for all intermediaries bound by professional privilege (or at the very least, those providing services in the field of tax advisory such as auditors and accountants), on the basis of the principle of equality guaranteed by the Article 10 bis of the Constitution.

The Luxembourg's parliamentary commission on finance and the budget (Commission des finances et du budget) approved on 14 February 2020 several amendments proposed by the State Council among which the full exemption of reporting for lawyers, auditors and accountants. The latter are still required to notify other intermediaries (or as the case may be, the taxpayer itself) of their reporting obligations. Same penalties would apply for failing to notify or to report.

Parliament should vote on the amended version of the Bill in early March pending the State Council’s approval.