Luxembourg tax rulings secured before 1 January 2015 will no longer be valid as from 2020

Effective as from 1 January 2015, Luxembourg tax law regulates the issuance of tax rulings by the Luxembourg tax administration. As part of the conditions imposed by law, tax rulings are valid for a maximum period of five years.

With the aim to ensure consistency between the new and the old procedure, the draft bill regarding the 2020 Budget of the Luxembourg State provides that tax rulings issued before 1 January 2015, under the old procedure, will be valid up to the fiscal year 2019, provided the tax position(s) confirmed in the tax ruling concerned is/are still in line with currently applicable tax law.

We note that Luxembourg, EU and international tax law has changed significantly during the last years; therefore, we expect that many of the tax rulings issued prior to 1 January 2015 would not be valid anymore and, consequently, we expect that the impact of this time limitation would not be significant.

In the case where the taxpayer wishes to continue relaying on a tax ruling after the validity period has elapsed, the taxpayer may file a new tax ruling request under the new procedure.

The draft bill regarding the 2020 Budget of Luxembourg also foresees some additional tax modifications, notably:

• The ‘super-reduced’ VAT rate of 3% will be extended to for writers, authors, and singers in the context of the exercise of their profession.
• The tax credit available for taxpayers hiring unemployed persons (available up to 31 December 2019), will be extended to 31 December 2021.