Strategizing International Tax Best Practices – by Keith Brockman

Posts tagged ‘Luxembourg tax rulings’

Lux’s new transfer pricing framework

The Luxembourg Parliament has approved a draft law, effective 1/1/2015, that will provide a formal transfer pricing framework, coupled with relevant transfer pricing documentation.

PwC’s newsletter provides a summary of these developments:

http://www.pwc.com/en_GX/gx/tax/newsletters/pricing-knowledge-network/assets/pwc-luxembourg-transfer-pricing-legislation-formalised.pdf

Summary of key points:

  • Alignment with the arm’s length principle as stated in the OECD Model Tax Convention, covering transactions between Luxembourg related parties or cross-border transactions.
  • Tax return report of upward, or downward, transfer pricing adjustments whenever the transfer prices do not reflect the arm’s length standard.
  • Transfer pricing documentation expectation for the three-tiered approach in accordance with the OECD’s final Chapter V guidelines.
  • APA’s: Competent Authority will seek advice for advance tax confirmations from a tax rulings commission for additional legal certainty. ┬áThe tax confirmation rulings will be published in anonymous and summary form.

Luxembourg sends a strong statement of its alignment with the arm’s length principle and revised OECD transfer pricing documentation guidelines. ┬áTax transparency of the APA ruling process and recognition of transfer pricing adjustments, upward or downward, also provide a revised state of play in this jurisdiction that performs a vital tax and economic role going forward for MNE’s and other tax administrations.

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