Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

April 11, 2019
2019-5516

Luxembourg deposits instrument of approval for MLI

Following the adoption of the law of 7 March 2019 approving the Multilateral Convention To Implement Tax Treaty Related Measures To Prevent Base Erosion and Profit Shifting (MLI), Luxembourg deposited its instrument of approval with the Organisation for Economic Co-Operation and Development (OECD) on 9 April 2019. It also submitted its MLI positions and a list of 81 tax treaties which Luxembourg entered into with other jurisdictions that it wishes to designate as a Covered Tax Agreement (CTA).1

The MLI will enter into force for Luxembourg on the first day of the month following the expiration of a period of three months beginning on the date of the deposit by Luxembourg of its instrument of approval, i.e., 1 August 2019.

The provisions of the MLI with respect to a CTA will have effect after Luxembourg and the other party to the relevant CTA have deposited their instrument of ratification, acceptance or approval of the MLI and a specified time has passed, with a further distinction between different provisions:

  • With respect to taxes withheld at source on amounts paid or credited to nonresidents, the provisions will have effect where the event giving rise to such taxes occurs on or after the first day of the calendar year that begins on or after the latest of the dates on which the MLI enters into force for each of the Contracting Jurisdictions to the CTA. Towards those Contracting Jurisdictions to a CTA that have already deposited their instrument of ratification, acceptance or approval or that deposit it before the end of September 2019, the provisions of the MLI will have effect where the event giving rise to taxes withheld at source occurs on or after 1 January 2020.
  • With respect to all other taxes levied by a Contracting Jurisdiction, the first taxes for which the provisions will enter into effect are those which are levied with respect to taxable periods beginning on or after the expiration of a period of six calendar months from the latest of the dates on which the MLI enters into force for each of the Contracting Jurisdictions to the CTA. Towards those Contracting Jurisdictions to a CTA that have already deposited their instrument of ratification, acceptance or approval or that deposit it before the end of April 2019, the provisions of the MLI will have effect for taxes levied with respect to taxable periods beginning on or after 1 February 2020.

The provisions of Part VI (Arbitration) will have effect with respect to:

  • Cases presented to the competent authority of Luxembourg (as described in subparagraph a) of paragraph 1 of Article 19 (Mandatory Binding Arbitration), on or after the later of the dates on which the MLI enters into force for each of the Contracting Jurisdictions to a CTA. Towards those Contracting Jurisdictions to a CTA that have already deposited their instrument of ratification, acceptance or approval or that deposit it before the end of April 2019, the date of effect would be 1 August 2019.
  • Cases presented to the competent authority of Luxembourg prior to the later of the dates on which the MLI entered into force for each of the Contracting Jurisdictions to a CTA (1 August 2019 for Luxembourg), the provisions will have effect on the date when both Contracting Jurisdictions have notified the Depositary that they have reached mutual agreement.

As of the date of publication of this Tax Alert and based on the OECD’s MLI status list,2 the provisions of the MLI would have effect as from 1 February 2020 with respect to the following CTAs: Austria, Finland, France, Georgia, Guernsey, Ireland, Isle of Man, Israel, Japan, Jersey, Lithuania, Malta, Monaco, the Netherlands, Poland, Serbia, Singapore, Slovak Republic, Slovenia, Sweden and the United Kingdom.

Endnotes

1. See EY Global Tax Alert, Luxembourg publishes draft law ratifying Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS, 4 September 2018.

2. See http://www.oecd.org/tax/treaties/beps-mli-signatories-and-parties.pdf.

For additional information with respect to this Alert, please contact the following:

Ernst & Young Tax Advisory Services Sarl, Luxembourg City
  • Bart Van Droogenbroek, Tax Leader | bart.van.droogenbroek@lu.ey.com
  • Marc Schmitz, Tax Policy Leader | marc.schmitz@lu.ey.com
  • Olivier Bertrand, Private Equity Tax Leader | olivier.bertrand@lu.ey.com
  • Dietmar Klos, Real Estate Tax Leader | dietmar.klos@lu.ey.com
  • Fernando Longares, TMT & Life Science Tax Leader | fernando.longares@lu.ey.com
  • Christian Schlesser, Commercial & Public Sector Tax Leader | christian.schlesser@lu.ey.com
  • Jacques Linon, Banking & Insurance Tax Leader | jacques.linon@lu.ey.com
  • Vincent Rémy, Asset Management Tax Leader | vincent.remy@lu.ey.com
  • Nicolas Gillet, Transfer Pricing Leader | nicolas.gillet@lu.ey.com
  • Elmar Schwickerath, Global Compliance and Reporting Leader | elmar.schwickerath@lu.ey.com
Ernst & Young LLP (United States), Financial Services International Tax Desks – Luxembourg, New York
  • Jurjan Wouda Kuipers | jurjan.woudakuipers@ey.com
  • Michel Alves de Matos | michel.alvesdematos@ey.com
Ernst & Young LLP (United States), Luxembourg Tax Desk, New York
  • Serge Huysmans | serge.huysmans@ey.com
  • Xavier Picha | xavier.picha@ey.com
Ernst & Young LLP (United States), Luxembourg Tax Desk, Chicago
  • Alexandre J. Pouchard | alexandre.pouchard@ey.com
Ernst & Young LLP (United States), Luxembourg Tax Desk, San Jose
  • Andres Ramirez-Gaston | andres.ramirezgaston@ey.com

ATTACHMENT

 
 

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

 

Copyright © 2023, Ernst & Young LLP.

 

All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.

 

Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.

 

"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.

 

Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct