Tax Controversy & Dispute Resolution

These consultation letters refer to § 205 AO for income, business and wealth taxes and are called "procés-verbal" in VAT matters. Often, this marks the beginning of a tax dispute. It is therefore crucial to prepare your response in a timely, clear and concise manner.

You have three months to react! Tax authorities frequently challenge the tax technical merits of your case and often question the business rationale or the documentation of your case.

Transfer pricing (TP) adjustments in one country may trigger double taxation in another. TP disputes are a balancing exercise and often factual rather than technical. It is crucial to establish the relevant facts in light of the available documentation, evaluate their consistency with the actual conduct of the parties and support them with evidence.

The number and intensity of corporate tax, transfer pricing and VAT audits (contrôles fiscaux) in Luxembourg has increased significantly in recent years. On an international level, simultaneous controls and joint audits with foreign authorities are on the rise. Tax audits can be difficult to manage. They require a clear strategy and a thorough understanding of how tax procedures work.

With the rise in tax audits in other countries and the growing transparency in tax matters, the number of requests for the exchange of information is also on the rise. Within a short deadline, a large amount of data and documents must be submitted to the tax authorities under the threat of severe penalties. And the commercial rationale of Luxembourg structures must be explained to foreign tax auditors in an easily understandable way.

The growing complexity of tax laws can sometimes result in unintentionally crossing the fine line between non-compliance and tax crimes. Tax authorities are obliged to report suspicious cases to the public prosecutor. Likewise, regulated professionals must do so, since tax crimes are a predicate offense for money laundering.