Latest trends and expectations for 2025
DAC6: Professional secrecy
The Court of Justice of the European Union in its judgment of 29 July 2024 ruled that accountants and tax advisors will no longer be able to invoke professional secrecy. Only lawyers will continue to be exempt from reporting obligations.
The court’s decision confirms the validity of the DAC 6 Directive, which requires the reporting of aggressive tax planning schemes. This ruling will have a significant impact on professionals such as tax advisors and accountants, who will no longer be able to rely on professional secrecy to avoid reporting obligations.
However, to date, Luxembourg law has still not been adapted in this respect, therefore accountants and tax advisors are still applying this exception.
In addition, the annual report of the Luxembourg Direct Tax Authorities for the years 2021, 2022 and 2023 provide some statistics about the number of DAC6 reportable arrangements exchanged with other EU jurisdictions.
| 2021 (first year of DAC6 exchange of information – incl. Transitory period, i.e. as from 25 June 2018 |
1,930 |
| 2022 | 332 |
| 2023 | 508 |
DAC7: Insight on the feedback received from investors/client notification letters
As you may know, the implementation of DAC 7 Law in the Luxembourg legal framework extended reporting requirements under DAC, notably CRS Reporting and DAC 6 Reporting, concerning reportable individuals.
Concretely, it means that Luxembourg Financial Institutions were required to submit notification letters to their individual clients reportable under CRS before the submission of the FY23 FATCA and CRS reports, to be filed before 30 June with Luxembourg Tax Authorities.
The main feedback received concerned change of address (including the tax residency), change of controlling person (for Passive NFFE only) and entity classification update. Further to feedback received, financial institutions had to update their IT systems and request additional information to support the change of circumstances. In certain cases, it had an impact on reporting since the reportability of the account holder was impacted.
During our annual PwC Compliance officer conference, we had the opportunity to ask one question in this respect to our panel (55 respondents). More than half of the respondents are still not impacted by this notification requirement since they prepared and filed CRS nil reports. Concerning the other half who sent those letters, a quarter of respondents sent those letters in due time and smoothly and the other quarter, although the letters were sent indicated that the process was burdensome. We had very few respondents who were not in a position to send those letters in due course.
Contact us
Pierre Kirsch
Tax Partner and Authorised Manager of the PSF, PwC Regulated Solutions S.à r.l.
Tel: +352 49 48 48 4031
Email
Camille Perez
Tax Partner, PwC Regulated Solutions S.à r.l.
Tel: +352 621 334 618
Email
Robin Bernard
Tax Director, PwC Regulated Solutions
S.à r.l.
Tel: +352 621 333 726
Email
Amended SPF Law
The draft law n°8414 intends to amend the Law of 11 May, 2007, in relation to the creation of a private wealth management company (Société de gestion de patrimoine familial - “SPF”).
The modifications notably aim at (i) increasing the minimum annual amount of subscription tax from EUR 100 to EUR 1,000, (ii) introducing the possibility of imposing administrative fines in the event of specific violations of the Law of 11 May, 2007, and (iii) adjusting the existing procedure for withdrawing the SPF’s tax status.
Corporate Tax update
On 23 May 2023, the Luxembourg government submitted a draft law (n°8388) to Parliament, introducing several amendments aiming to address some recent jurisprudential developments, to clarify certain technical aspects of the tax law.
The main amendments proposed by the draft law n°8388 are the following:
- Clarification of the scope of the partial liquidation treatment applying to the redemption of classes of shares followed by their cancellation;
- Option provided to the taxpayer to renounce to the dividend exemptions provided by articles 115.(15a) and 166 of the income tax law as well as to the related capital gain tax exemption provided by grand-ducal regulation; and
- Modification of the Luxembourg minimum net wealth tax regime which was partly ruled unconstitutional by the Luxembourg constitutional court on 10 November 2023.
