(November 7, 2014)
On November 6, 2014 the Luxembourg Ministry of Finance issued a press release in which it comments on the Luxembourg practice of advance tax decisions. In the press release the Luxembourg Ministry of Finance states that following the publication of the ICIJ consortium of over 500 advance tax decisions (“tax rulings”) issued by the Luxembourg tax administration between 2002 and 2010 it would like to provide further clarifications.
On its website the Luxembourg Ministry of Finance published an English translation of a press release it issued on November 6, 2014. Below you will find the clarifications as included in the English translation of the press release.
“The practice of advance tax decisions is well established in many countries, including Luxembourg.
In these decisions, the tax administration sets out how it intends to apply the existing national and international tax rules to a specific situation.
The European Commission has confirmed that this practice is not in conflict with European law, provided that all taxpayers in a similar situation are treated equally.
The advance tax decisions issued by the Luxembourg tax administration are compliant with national, European and international law. Their legality is not contested.
The interaction of the tax regimes of multiple countries, within the current international framework, can lead to a significant reduction of the tax burden of multinational companies. The analysis of this situation calls for a broad perspective, and cannot be limited to one country's regulatory framework.
Since the financial and economic crisis, states and citizens take a fresh look at international taxation matters. The legitimacy of certain mechanisms, which are compliant with international law, is put in doubt.
Luxembourg shares those concerns. In particular, Luxembourg believes that it is not acceptable that companies take advantage of the international legal framework to avoid de facto all taxation.
The relevant international rules need to be adapted to today's realities. This requires a coordinated effort by the international community.
The Luxembourg government has taken a strong position in favor of transparency in fiscal matters.
Luxembourg is an active and positive player in the discussions at OCDE and EU level, which aim at achieving greater fairness in international tax matters.
At the national level, the government has submitted to parliament, in early October 2014, a draft law which provides an enhanced framework and greater transparency with regard to advance tax decisions.
On a European level, Luxembourg has supported, in July 2014, the addition of new provisions to the parent-subsidiary directive, which aim at preventing the double non taxation of companies through hybrid mismatches. Luxembourg also supports the introduction into this directive of a generalized anti-abuse clause.
Over the course of the last few months, Luxembourg has taken clear steps in favor of the adoption of the automatic exchange of information in tax matters as the new global standard. As of 2015, Luxembourg will apply the automatic exchange of information based on the EU savings directive. Luxembourg will count among the Early Adopters of the OCDE Common Reporting Standard for Automatic Exchange of Financial Account Information, starting in 2017.”
Furthermore the press release contains links to several other websites of the Luxembourg Government where additional information on the matter can be found.
Yesterday the European Commission published on its website a statement of the European Commissioner for Competition, Magrethe Vestager, on tax state aid investigations.
For further information click here to be forwarded to the English translation of the press release as issued by the Luxembourg Ministry of Finance.
Would you rather read the press release as issued by the Luxembourg Ministry of Finance in French, then click here.
Would you rather read the press release as issued by the Luxembourg Ministry of Finance in German, then click here.
For the statement of Magrethe Vestager click here and you will be forwarded to the website of the European Commission, which will open in a new window.
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