Luxembourg Proposes Law To Enact Global Tax Reporting Rules
Companies doing business in Luxembourg will be required to file global tax information now that the nation has released draft legislation to implement new international tax reporting rules.
The rules—known as country-by-country reporting—would require companies to submit a global blueprint outlining the location of their operations, taxes paid, income earned, and other key aspects about their business. They were released last year by the Organization for Economic Cooperation and Development as part of a coordination multi-country effort against tax-base erosion and profit shifting.
When the draft legislation, released Aug. 2 is adopted, all companies with entities in Luxembourg with consolidated annual group revenue of at least 750 million euros ($839 million) would be required to file reports for tax years beginning after Jan. 1, 2016.
Companies that neglect to file could be fined as much as 250,000 euros, according to an Ernst & Young LLP alert analyzing the draft legislation.
The draft legislation also includes a secondary filing system for companies that have only subsidiaries, but not their parent organizations, in Luxembourg. The requirement can be satisfied if the parent jurisdiction requests the information itself, and submits it to Luxembourg through information-sharing treaties or agreements.
Luxembourg is one of 44 countries that signed onto the Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports, committing to participating in a global exchange of the reports.
The European Parliament approved country-by-country reporting rules in May. The draft legislation would adopt the EU language into Luxembourg law (25 Transfer Pricing Report 102, 5/26/16).