Greetings,
It’s already been a year since the COVID-19 pandemic hit us. Now, vaccination campaigns throughout the world provide a glimmer of hope, which must be seized in order to prepare for the future. In this context, from a tax and legal point of view, COVID-19 is no longer at the centre of the measures taken, so things are moving forward.
On 22 February 2021, the EU Council updated the EU list of non-cooperative tax jurisdictions, which directly impacts the scope of application of three different Luxembourg tax measures: 1) the corporate income tax deduction of interest and royalty expenses, 2) the requirement to disclose transactions with entities located in non-cooperative jurisdictions in corporate income tax returns and 3) the mandatory disclosure under DAC6. We describe the update of the EU list and its impact in Luxembourg.
On 8 January 2021, the Luxembourg tax authorities issued a circular in order to provide guidance on the interpretation of the interest deduction limitation rules implemented in accordance with ATAD. We will go through various points which the long-awaited circular sheds light on.
In the 2021 budget law, a new provision dealing with the tax consolidation regime was introduced with effect as from tax year 2020. The new provision confirms that the change of a consolidated group from a vertical form to a horizontal form will not entail any negative tax consequences for the members of the group, provided that, notably, the change is made before the end of 2022. We describe the new rules applicable and their consequences in the future.
From an individual tax and social security perspective, since the COVID-19 pandemic continues to impact the dayto-day work organisation of businesses, the possibility for cross-border workers to work remotely was extended until 30 June 2021. We describe the framework and its implications for cross-border workers.
From a VAT perspective, on 11 March 2021, the CJEU answered the question whether or not services provided by a head office to its branch located in another jurisdiction are to be considered as transactions for VAT when the head office is part of a VAT group. We go through this decision and its implications for businesses with foreign branches whose head offices are part of a VAT group.
In another of its recent decisions, the CJEU examined whether or not the provision of a company car to a non-resident employee used for both business and private purposes constitutes a long-term hiring of a means of transport subject to VAT in the employee’s country of residence. We explain this decision and its impact for Luxembourg employers.