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 and legal persons, resident or not, can submit a corrective 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.
The corrective tax return must be submitted by 31 December 2017 at the latest.
How to proceed
The corrective tax return only applies to taxable income and all other assets held.
Income and assets resulting from the following are taken into account:
agricultural and forestry profits;
self-employed activities (liberal professions);
pensions or annuities;
renting out property;
miscellaneous net income.
Income and assets from the last 10 years can be subject to a corrective tax return.
Corrective tax return
The corrective tax return must be submitted on plain paper to the tax office concerned.
It must be accompanied by supporting documents which are necessary for examining the case. These are namely:
an affidavit (sworn statement) attesting that the corrective tax return includes all undeclared income to date;
a detailed description of the facts. The written document must present the origin of undeclared assets held in a detailed and circumstantial manner and be accompanied by documentary proof:
justifying the origin of the assets; or
providing enough elements to establish the origin of said assets;
such as, a certificate from the establishments, namely banking establishments where the assets are kept, attesting that the bank statements are complete;
for legal persons: corrective financial accounts..
The corrective tax return must be
unique and complete. Hence, it is
not possible to submit
several applications for regularisation.
Full payment of the tax
Taxpayers who have submitted a corrective tax return are subject to the full payment of the amount indicated on the revised tax assessment increased by:
10 % if the corrective tax return is submitted between 1 January and 31 December 2016;
20 % if the corrective tax return is submitted 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 undeclared taxes is
not paid in full, the taxpayer can no longer invoke the benefit of regularisation of tax debt and becomes subject to the
sanctions foreseen by the law.
The additional tax charge for failure to submit a tax return or late tax returns will not be applied.