DAC 6 – Some clarifications by the Luxembourg tax authorities

In their publication, the LTA made a number of useful confirmations and comments as follows.

Main Benefit Test

The LTA confirmed that they share the view already expressed by the “Commission des Finances et du budget” in the report that included the text of the Bill in its final form to be voted. More particularly, the LTA confirmed that the main tax benefit is not met (thus making an arrangement or transaction potentially not reportable) when the tax advantage concerned is obtained via an arrangement that is in line with the purpose or the aim of the applicable legislation and of the intention of the legislator. To determine if the arrangement is in line with this intention, all constitutive elements of the arrangement have to be taken into consideration in order to assess whether the arrangement, considered globally, corresponds or not to this intention. As a converse example, the main benefit test will be considered as met (and the arrangement or transaction therefore reportable) when it uses the nuances ("subtilités") of a tax system, or inconsistencies between two or several tax systems, in order to reduce the tax due.

Notification obligation for intermediary benefiting from the waiver of the reporting obligation due to professional secrecy

Lawyers, audit and/or qualified accountants firms benefit from a waiver of their reporting obligations due to their professional secrecy. 

Intermediaries exempted from their reporting obligations however have an obligation to inform, within 10 days as from the key date (see our previous Flash News for more details), each other intermediary or, in the absence of an intermediary, the taxpayer, of their respective reporting obligations. Such other intermediary or taxpayer will then have to file, within 30 days as from the same key date, the report to the Luxembourg tax authorities.

In this respect, the tax authorities have confirmed that: 

• the notification obligation is also towards non-Luxembourg intermediaries. Such non-Luxembourg intermediaries will, if they consider the transaction as reportable, make the reporting to the tax authorities of their Member State of residence;
• any intermediary or taxpayer who has received notification of a reporting obligation by an intermediary subject to professional secrecy has the right to revise the initial assessment made by the notifying intermediary and, based on the facts and circumstances, to conclude that the arrangement is not reportable. If this revision would result in an absence of declaration by said intermediary or relevant taxpayer, this absence of declaration is not likely to engage the responsibility of the first exempted intermediary who did the notification.
• intermediaries do not have a specific obligation to actively seek information they do not have in the first place and going beyond existing professional obligations.

Concept of participant

The LTA confirmed that an intermediary that designs, markets, organises, makes available for implementation, or manages the implementation of a reportable cross-border arrangement (so-called “Promoters”) is not to be considered as a participant to the reportable cross-border arrangement unless such intermediary is itself active in the arrangement that he designed or if he managed the implementation for the benefit of the relevant taxpayer.

Arrangement "made available"

The LTA have indicated that an arrangement is made available when the intermediary has delivered to the taxpayer the concerned contractual documents or has made them accessible without an implementation being required.

Evidence that a reporting has been done by another intermediary or relevant taxpayer

In this respect, the LTA have specified that:

• proof that the same information has been transmitted in another Member State and/or by another intermediary or relevant taxpayer must be provided by any means at the request of the LTA. The LTA will make a case-by-case assessment based on the facts and circumstances. A written document from the competent authority of the relevant Member State is one proof among others. The only indication of the reference number of the arrangement will not in principle be considered as sufficient.
• in relation to reporting done in Luxembourg, a transmission slip as well as a pdf document detailing the information communicated to the LTA will be generated via the platform MyGuichet. In addition, after the automatic exchange of information, a certificate of declaration, established by the LTA, will be made available to the one having made the reporting on the MyGuichet platform. The LTA informed that they cannot however guarantee that these documents will be accepted as evidence by other competent authorities of the EU.

Other practical information:

As to the reporting itself and as already communicated (see notably our Newsletter dated 2 April 2020), two options should be offered to the intermediaries / taxpayers in charge of the reporting: 

• a specific filing procedure via My Guichet (available in English, French and German), 

• a "drag and drop" of a specific XML file.

The procedures are available in French, German and English. As to the summary of the content of the reportable cross-border arrangement, details of the national provisions that form the basis of the reportable cross-border arrangement as well as any other free text fields must be provided in English only regardless of the language used for the process.

The LTA have also clarified that when the person doing the reporting is not aware of the information to compulsory declare, he has the possibility of fulfilling the fields as follows:

• unknown for the tax identification number (TIN) and free text fields;
• 01/01/1900 for the dates and;
• 1 for the values.

1. PwC Luxembourg (www.pwc.lu) is the largest professional services firm in Luxembourg with 2,870 people employed from 76 different countries. PwC Luxembourg provides audit, tax and advisory services including management consulting, transaction, financing and regulatory advice. The firm provides advice to a wide variety of clients from local and middle market entrepreneurs to large multinational companies operating from Luxembourg and the Greater Region. The firm helps its clients create the value they are looking for by contributing to the smooth operation of the capital markets and providing advice through an industry-focused approach.

2. The PwC global network is the largest provider of professional services in the audit, tax and management consultancy sectors. We are a network of independent firms based in 158 countries and employing over 250,000 people. Talk to us about your concerns and find out more by visiting us at www.pwc.com and www.pwc.lu.