Luxembourg announces additional deadline extensions in direct tax matters
A new bill seeks to grant a one-year extension for claims whose collection is entrusted to the Luxembourg tax authorities (such as direct taxes and social security claims) that would otherwise expire by 31 December 2020. It also plans to prolong by a full year the privileged position for the Luxembourg tax authorities in the enforcement of their claims. At the same time, the bill extends several deadlines relating to tax litigation.
Extended deadlines for the Luxembourg tax authorities
The period for the assessment and collection of claims whose collection is entrusted to the Luxembourg tax authorities (such as direct tax debts and social security claims) that would otherwise expire by 31 December 2020 is extended to 31 December 2021. In practice, the Luxembourg tax authorities would thus have one more year for the collection and assessment of claims from tax year 2015 or, in case of non-filing or inaccurate filing, from tax year 2010.
This may have an impact on existing situations where the increase of five to six years (and of 10 to 11 years, respectively) has not been anticipated. It is unclear whether the legislator will agree that there is sufficient justification for this change.
The same one-year extension would apply to all claims whose collection has been entrusted to the Luxembourg tax authorities by virtue of Directive 2010/24/EU concerning mutual assistance for the recovery of claims relating to taxes, duties and other measures, or of a tax treaty.
The Luxembourg tax authorities have a privileged position in terms of enforcement of their claims and they have, for instance, the right to seize immovable property situated in Luxembourg by way of a simplified procedure. Under the bill, the period during which this privileged position can be used would also be extended by a full year.
Extended filing deadlines relating to direct tax litigation measures
As from the publication of the law, the deadline of three months for filing objections against decisions of the Luxembourg tax authorities and filing administrative appeals would be suspended until 30 June 2020. The practical impact of this measure will thus depend on the speed with which the legislator approves the bill. This measure will (for instance) not apply to cases where the filing deadline expired after the beginning of the COVID-19 crisis but before publication of the law.
This deadline extension for administrative objections and appeals with the Luxembourg tax authorities complements the already approved extension of deadlines for filing tax claims before the administrative courts and the suspension of deadlines for filing briefs in ongoing proceedings before such courts.
Extended filing deadlines relating to 2019 tax returns
The bill formalises the postponement to 30 June 2020 of the filing deadline of 2019 income tax returns for both individual and corporate taxpayers. The Luxembourg tax authorities already announced such postponement earlier in March, together with some other measures in favour of corporate taxpayers regarding the waiver of 2020 tax advances and deferral of certain tax debts.
We will keep you updated on relevant developments. If you have any question, please contact your trusted Loyens & Loeff advisor.
Willem BonPartner Tax Adviser
Willem Bon, partner, is a member of the Tax Practice Group in our Luxembourg office. He focuses on cross-border tax issues, advising mainly multinational enterprises, investment funds, as well as wealthy individuals and families.T: +352 466 230 214 E: firstname.lastname@example.org
Anne KlethiAssociate Tax adviser / Attorney at law / Avocat à la Cour
Anne Klethi, associate, is a member of the Tax Practice Group in our Luxembourg office. She focuses on international tax matters, notably for private wealth investors, and tax litigation.T: +352 466 230 312 E: email@example.com