1. What is the position with respect to the applicability of emergency tax measures , including
a. what they are and apply to;
b. when they are expected to be phased out on or following a return to business; and
c. whether any transitional periods are likely to apply.
- Cancellation of tax advances for the first two quarters of 2020. Automatically granted and covers income tax and municipal business tax.
- Four-month deferral for the payment of corporate income tax, municipal business tax and net wealth tax if the tax debt arose after 29 February 2020. No late penalty interest will be due in this case.
- Deferral of personal income tax and corporate income tax return filings: deadline extended until 30 June 2020.
- Resident taxpayers receiving interest from a paying agent established in an EU and EEA Member State who wants to apply to benefit from the 20% flat rate taxation are allowed to file their applications up to 30 June 2020.
- The three-month deadline applicable to réclamations (§ 228 AO) and to recours hiérarchiques formels (§ 237 AO) is suspended until 30 June 2020. This extension would also apply to appeals for other decisions.
- For all tax claims expiring before 31 December 2020, the statute of limitation period will be extended until 31 December 2021.
- Periods of privileges and guarantees for the collection of direct taxes expiring before 31 December 2020 will be extended until 31 December 2021.
- VAT authorities will reimburse all pending VAT credit balances below EUR10,000. For businesses with VAT credit balances above EUR10,000 to be refunded, a specific ad-hoc refund procedure applies.
- Deferral of the payment of VAT to companies subject to VAT. The applicant must show financial difficulties due to the COVID-19 sitution.
- The regular 16th working day deadline for Intrastat declarations from February to June 2020 is moved back by up to two weeks.
The Intrastat declarations are filed by companies registered for VAT in Luxembourg and that receive or send goods in Luxembourg from other Member States.
- Increased flexibility in the payment of social security contributions as of 1 April 2020 – in other words, suspension of moratory interest calculations on payment delays, suspension of the start of proceedings for forced repayment of contributions, suspension of procedures involving bailiffs, and suspension of fines to employers for delays in declarations to the Social Security Office.
The measures above apply to SMEs and large enterprises during the time of the pandemic.
The extension of the filing deadline for VAT returns was suspended on 12 May 2020. VAT declarations that have not been filed during the state of emergency must be filed without delay.
Cross-border employees working from home:
In case of force majeure, the number of days that Belgian, French and German cross-border employees work outside of Luxembourg will not be taken into account under the 29-day (France), 24-day (Belgium) or 19-day (Germany) threshold allowing cross-border employees to perform their activity outside of Luxembourg without being taxed in their home country. This measure will apply until a new order is issued.
On 19 May 2020, Luxembourg and Belgium entered into a mutual agreement specifying that working days, for which salary has been paid and during which the employment has been exercised at home solely because of the measures taken to combat the pandemic, may be considered to have been performed in the contracting state in which the cross-border employee would have exercised their employment without the measures to combat the pandemic of COVID-19.
DAC6: The deadlines for the communication and exchange of information provided for in the law of 25 March 2020, which implements the provisions of DAC6 into domestic law, should be extended by six months. In practice, this means:
- information on reportable cross-border arrangements from the period 25 June 2018 to 30 June 2020 should be reported by 28 February 2021 (instead of 31 August 2020);
- the 30-day reporting period for cross-border arrangements that become reportable on or after 1 July 2020 should begin on 1 January 2021; and
- the first automatic exchange of information between Member States should take place on 30 April 2021 (instead of 31 October 2020).
The notification obligations for intermediaries covered by legal professional privilege (i.e. lawyers, chartered accountants and auditors) should also start from 1 January 2021.
The law of 24 July 2020 postpones the tax reporting deadlines under the FATCA and CRS regimes. The deadlines in the CRS law and FATCA law for the communication of data for the year 2019 should be extended by three months (i.e. this information should be reported by 30 September 2020).
2. Are there specific steps that businesses should take to prepare for these tax measures being phased out – for example new timing of
a. payment obligations (and therefore likely pressure on cash flow); and/or
b. filing of returns?
Requests for the measures above can be done online here or by sending relevant forms to the competent tax authorities.
3. Should the impact of emergency tax measures be reconsidered by businesses – e.g. are there certain legal transactions (such as sales or reorganisations) that parties should preferably postpone or accelerate?
4. Are there any additional measures proposed, in particular any that are targeted at particular sectors (e.g. aviation)?
5. Are there any sectors or interest groups that are now putting forward, or may in the near future request, special tax measures?
6. Which taxes might be increased to address the financial burden caused by the crisis, for example,
a. are there political commitments or policy trends that might indicate the likely focus of any tax increase in the future (e.g. to maintain low corporation tax, but to increases taxes on personal wealth)
b. measures to broaden the tax base, such as digital services taxation and a pre-emptive response to the OECD/ G20 Inclusive Framework on BEPS (“BEPS 2.0”)
No political commitments made at this stage.
7. Are there other actions that ought to be considered by businesses in your country e.g.
a. revisit past tax filings to claim carry back of losses;
b. revise or update preliminary tax assessments;
c. claim bad debt relief for VAT output tax
VAT authorities will reimburse all pending VAT credit balances below EUR10,000. For businesses with VAT credit balances above EUR10,000 to be refunded, a specific ad-hoc refund procedure applies.