Settling unpaid taxes (temporary regime from 1 January 2016 to 31 December 2017)

A temporary tax regime exists in Luxembourg that allows natural persons or legal entities who failed to report some or all of their income or other assets to regularise their unpaid taxes with Luxembourg Inland Revenue (Administration des contributions directes – ACD) and the Registration Duties, Estates and VAT Authority (Administration de l’enregistrement, des domaines et de la TVA – AED).

The purpose of the regime is to provide taxpayers with the opportunity to pay taxes on their unreported income or other assets without facing the sanctions provided for under the Luxembourg tax code.

Taxpayers have until 31 December 2017 at the latest to regularise their tax position.

Who is concerned

Natural persons and legal entities, whether or not they are resident or domiciled in Luxembourg, can file an amended tax return.

Taxpayers who are currently under investigation or audit by the tax authorities, or who are facing criminal prosecution for tax-related issues, are not allowed to file an amended return.

Deadlines

The amended tax return must be filed by 31 December 2017 at the latest.

How to proceed

Types of income to be reported

Income taken into account for the amended tax return includes all taxable income, as well as all other assets held.

This includes, in particular, income and assets derived from:

  • business profits;
  • agricultural and forestry profits;
  • self-employment;
  • paid employment;
  • pensions, annuities or other regular payments;
  • the rental of property;
  • investments in securities;
  • miscellaneous net income.

An amended tax return can be filed for income and assets from the last 10 years.

Amended tax return

Amended tax returns are to be submitted on plain paper to the tax office concerned.

They must be accompanied by all necessary supporting documents, including, in particular:

  • an affidavit (sworn statement) attesting that the amended tax return includes all unreported income to date;
  • a detailed description of the facts. This written document must disclose the origin of the unreported assets in a full and detailed manner. It must also be accompanied by any documentary proof that can:
    • justify the origin of the assets; or
    • provide enough circumstantial evidence to establish the origin of said assets;
  • if applicable, written confirmations from the financial institutions responsible for safeguarding the assets certifying that the taxpayer’s bank account statements include all assets held on the latter’s behalf;
  • for legal entities: corrected financial statements.
Only one amended tax return may be filed and it must be clear and comprehensive. Hence, it is not possible to submit several applications for the regularisation of unpaid taxes.

Full payment of tax due

Taxpayers who file an amended return must pay the full amount indicated on the revised tax assessment, to which is added:

  • a penalty of 10 % if the amended tax return is filed between 1 January and 31 December 2016;
  • a penalty of 20 % if the amended tax return is filed between 1 January and 31 December 2017.

Payment must be made within 1 month from the date of receipt of the revised tax assessment.

If the payment is made after that deadline, or if the amount of delinquent taxes is not paid in full, the taxpayer can no longer claim the benefit of the regularisation procedure, and becomes subject to all penalties and sanctions provided for by law.

The additional charge for failure to file a tax return or for late filing does not apply to amended tax returns.

Who to contact

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