Impact on tax litigation procedure
A suspension of time limits in jurisdictional matters has been enacted in order to safeguard the rights of taxpayers.
With regard to tax litigation procedures before the administrative courts (which are competent notably for direct tax matters), the suspension should apply to time limits within which the parties to the proceedings must lodge their appeal, and exchange their briefs and files. As this is a suspension (and not an interruption), the time limit should not start over again, but should just resume normally after the end of the COVID-19 crisis period. A specific provision is however governing the deadlines to file an appeal before the court of first instance:
- time limits expiring during the COVID-19 crisis period shall be postponed by two months from the date of the end of this period;
- time limits expiring in the month following the end of the COVID-19 crisis period shall be postponed by one month from their expiry date.
To date, the time limit to file a tax objection before the Director of the Luxembourg tax authorities is not suspended.
We expect further developments in this field and will provide updates on a regular basis.
Despite the COVID-19 measures, tax litigation deadlines should therefore be carefully monitored. Procedural steps and their respective "standard" time limits are detailed in this brochure.
Impact on the filing of tax returns
The deadline for filing 2019 direct tax returns has been postponed to 30 June 2020. This applies to corporate entities and individuals.
No penalties should apply for the late filing of VAT returns and of the 1st quarter 2020 subscription tax returns. This "administrative tolerance" should apply until otherwise indicated by the competent tax authorities.
Impact on tax payments
Companies and individual taxpayers carrying on a business are granted several possibilities to defer tax payments if they experience liquidity problems as a result of the COVID-19 crisis. They may notably apply for:
- a cancellation of the 1st and 2nd quarterly advances of the 2020 (corporate) income tax and municipal business tax (net wealth tax is excluded); and
- a 4-month delay of payment for (corporate) income tax, municipal business tax and net wealth tax due after 29 February 2020 (taxes due before this date and withholding on wages are excluded). No interest for late payment should apply.
The above-mentioned cancellation and delay of payment can be requested by sending a specific form to the Luxembourg tax authorities. These requests should be automatically accepted.
In parallel, standard methods to claim a reduction of tax advances and to request a delay of payment are still available.
As regards VAT, all credit balances below EUR 10,000 will be reimbursed.
The Luxembourg office tax team is highly specialised in tax procedure and is fully aware of the latest changes in this field. To discuss the implications for your business, or to receive more information on other COVID-19 tax and legal measures, please get in touch with your usual Ashurst contact or with one of the tax litigation specialists listed below.
