Luxembourg has introduced new disclosure requirements for companies operating in the country that enter into transactions with related parties resident in a territory listed on the EU's tax blacklist.
Under Circular LG-A no.64, Luxembourg resident companies must state in their tax return if they have entered into transactions with 'related enterprises' in jurisdictions included on the EU blacklist, starting from the 2018 tax year.
In addition to this basic reporting requirement, companies are required to prepare a file containing details of the transactions in question, such as income and expenses as well as a statement of receivables and liabilities outstanding with the related party.
The file should be kept at the registered office of the company and must be made available on request to the tax authorities as part of a review of the tax return or an on-site inspection.
The Circular also states that the tax affairs of companies engaged in such transactions will be subject to enhanced levels of scrutiny.
The new disclosure requirement will be based on the EU blacklist as it stood at the end of the relevant financial year. For 2018, this means only American Samoa, Guam, Samoa, Trinidad and Tobago and the US Virgin Islands.
The Luxembourg tax authority is the first to officially announce sanctions against jurisdictions designated by the European Union as "non-cooperative" for tax purposes.