28 May 2019 Luxembourg imposes reporting requirements for EU-designated non-cooperative jurisdictions for tax purposes Starting from tax year 2018, the Luxembourg tax authorities have imposed specific reporting requirements in relation to transactions of Luxembourg companies with related enterprises1 located in jurisdictions that are included on the European Union (EU) blacklist (see below for background on the blacklist). As per Circular L.G. – A n°64,2 Luxembourg resident companies are required to state in their tax return if they have entered into transactions with related enterprises located in listed jurisdictions. Details of those transactions, such as the amount of the transaction, income and expenses linked to the transaction and the detail of receivables and debts towards such related enterprises, must be provided upon request by the tax administration. As per the Circular, reinforced control will generally be applied if taxpayers rely on structures or arrangements involving non-cooperative jurisdictions for tax purposes that are included in the EU blacklist. It should be noted that for the disclosure requirement as mentioned above, the EU blacklist as it stands at the end of the financial year concerned needs to be consulted. For Luxembourg companies whose financial year 2018 coincides with the calendar year 2018, the following jurisdictions are relevant: American Samoa, Guam, Samoa, Trinidad and Tobago and US Virgin Islands. The evolution of the EU list of non-cooperative jurisdictions for tax purposes can be consulted on the European Commission's webpage.3 The EU published its list of non-cooperative jurisdictions for tax purposes (the EU blacklist) for the first time on 5 December 2017, comprising at that time 17 jurisdictions deemed to have failed to meet the tax transparency, fair taxation and implementation of anti–base erosion and profit shifting measures (BEPS) criteria established by the European Commission. The list has evolved since its first publication in 2017, notably on 12 March 2019, when the Council of the European Union (ECOFIN) added to the five jurisdictions listed at that time, 10 additional jurisdictions, being Aruba, Barbados, Belize, Dominica, Fiji, Marshall Islands, Oman, United Arab Emirates and Vanuatu. On 17 May 2019, the ECOFIN agreed to remove Aruba, Barbados and Bermuda from the list, reducing the total number of jurisdictions on the EU blacklist to 12.4 It should be mentioned that a number of other jurisdictions are included in a screening list (the EU grey list). For those jurisdictions, the commitments on meeting the aforementioned criteria have been deemed sufficient, but their implementation will continue to be closely monitored by the EU. 1 "Related enterprise" as per the definition of article 56 of the Income Tax Law: "When an enterprise participates, directly or indirectly in the management, control or capital of another enterprise, or where the same individuals participate, directly or indirectly, in the management, control or capital of two enterprises (…)." 2 Circular L.G. – A n°64 of 7 May 2018 on counter-measures in relation with the EU list on non-cooperative countries and territories in tax matters. 4 American Samoa, Belize, Dominica, Fiji, Guam, Marshall Islands, Oman, Samoa, Trinidad and Tobago, United Arab Emirates, US Virgin Islands and Vanuatu.
Ernst & Young LLP (United States), Financial Services International Tax Desks – Luxembourg, New York Document ID: 2019-0997 |
