Agefi Luxembourg - mars 2025

AGEFI Luxembourg 14 Mars 2025 Economie EY Luxembourg’s Asset Servicers Roundtable Comprehensive analysis of Luxembourg’s shifting tax landscape O n 4 February 2025, EY Luxembourg hosted the Asset Servicers Tax Roundtable, bringing together tax professionals and industry experts to discuss the latest tax developments, compliance obli- gations, and regulatory updates affecting asset servicers. This edi- tion focused on key areas such as personal tax, VAT updates, legal and compliance challenges, and the growing impact of ESG consi- derations in tax governance. NewFiscalMeasures andTheir Implications InsightsfromChristopheJoosen,Partner,Peo- pleAdvisoryServicesLeader,EYLuxembourg Luxembourg government introduces in its Lawdated 20 December 2024 a range of tax incentives aimed at attracting for- eign professionals and fostering eco- nomic growth. A major highlight is the reformof the Impatriate tax regime, shift- ing towards a 50% flat-rate exemption for qualifying professionals, replacing the former system based on specific al- lowances. This streamlining simplifies administrationwhilemaintainingstrong financial incentives. However, thebenefit is lost if an Impatri- ate switches employers within Luxem- bourg, raising questions about its effectiveness as a long-term talent reten- tiontool.Employerswillalsoneedtocon- sider the impact of the Prime jeune salarié , an incentive designed to encourage youngertalenttoremaininLuxembourg, andthe PrimeLocative (Lawdated22May 2024), offering a rental allowance to ease housing affordability.While thesemeas- ures are welcomed, the administrative complexity for employers implementing them remains a challenge. Thesenewmeasuresdemonstrate the in- tentionofthetaxauthoritiestostreamline the implementation of employee reten- tion and attraction measures, while re- ducing theadministrative complexity for employers. VATCompliance and Digitalization Insights from Olivier Lambert, Partner, Indirect Tax Leader, EY Luxembourg Further to the decision on 22November 2024 of the Luxembourg first-tier Court, confirming the decision from the CJEU in the so-called “TP Case” (Case C- 288/22 dated December 21, 2023), Lux- embourg VAT authorities released Circular 781-2 confirming that VAT shouldnot apply todirectors’ feeswhen no economic risk is borne by the direc- tor. These decisions are leading to a broad regularization process, allowing impacted directors to reclaim VAT they had previously charged to their cus- tomers. The repercussions are particu- larly significant in the private equity and financial sectors, where accumulated VAT costs by the customers can be sub- stantial. Despite the Circular, the scope of the regularization remains unclear in particular situations and a case-by-case analysis has to be done by the directors and their customers. The digitalization of tax compliance will continue to reshapeLuxembourg’s regu- latory landscape, particularly with the upcoming implementation of VAT in the DigitalAge(ViDA) throughEurope.While Luxembourg has not yet published any regulation in that matter, the EU Parlia- ment has recentlyvalidated the program and fixed 2030 as a deadline for the e-in- voicing and e-reporting adoption in all theEUcountries and forEUcross-border transactions. Luxembourgbusinessesoperatingacross multiple jurisdictions may face earlier compliance obligations while local e-in- voicing regulations are implemented step-by-step. Businesses need to act now toprepare for the transition. Theupcom- ingreforms emphasize thegrowingneed for automation and digital transforma- tion in tax governance, reducing reliance onmanual filings and ensuringmore ro- bust compliance tracking. DAC8, Legal and Tax Controversy Updates DAC8 and Tax Transparency Insights from Dan Zandona, Partner, Asset Servicing Tax Leader, EY Luxembourg DAC8 applies to all service providers fa- cilitating transactions in crypto-assets for EUcustomers,withthegoalofenhancing the legislative frameworkbybroadening the scope of due diligence and reporting obligations. However, DAC8 is also amendingDAC2 (CRS) by requiringRe- porting Financial Institutions (RFIs) to provideadditionaldetailsintheirCRSre- ports. This includes specifying whether an account is a Pre-existing or NewAc- count, whether a valid self-certification has been obtained, identifying joint ac- counts, detailing the type of financial ac- count, and outlining the role of Controlling Person. To comply with these new require- ments, RFIs must adapt their client on- boarding processes, including Know Your Customer (KYC) andAnti-Money Laundering (AML) procedures. This also entails reviewing and reconciling data from existing account holders, up- dating reporting tools, andensuring that all resources involved in the CRS process are informed and trained on the new obligations. As more information about account holders will be ex- changed, RFIs andasset servicers should also be prepared for audits or questions fromtax authorities, whichwill be better equipped to scrutinize compliance. Legal Updates: MobilityDirective InsightsfromRalucaSilaghi,Partner,EYLaw Beyond DAC8, Luxembourg’s legal framework continues to evolve with the long-awaited transpositionof the Mobility Directive , streamlining EU cross-border transactions (mergers, divisions and con- versions). In line with Directive, the law will amend the Company Law by intro- ducing newmeasures, among others, the withdrawalrightsforminoritysharehold- ersopposingthetransactionandextended reportingobligationsforthemanagement. Further on, the overall implementation timeline will be lengthier as notaries are grantedathree-monthtermtoreviewthe legality of the transaction and the possi- bilitytoaskforanadditionaltermofthree months should theyneedmore informa- tion to fulfill theirduties. Therefore, early preparation and calendarization will be crucial for restructuring operations be- tween companies located in the EU. Tax Controversy and Regulatory Scrutiny Insights from Hélène Crépin, Partner, Tax Controversy, EY Luxembourg Another keydiscussionpointwas the in- creasing scrutiny fromthe Administration des Contributions Directes (ACD) . With closer collaboration between the ACD and the Commission de Surveillance du Secteur Financier (CSSF) , companies should be aware that tax authorities and theCSSFmaynowexchangeinformation that is necessary for the exercise of their respectivemissions, inparticularwithre- spect to the communication of informa- tion under the law relating to the Common Reporting Standard and the law relating to FATCA. This measure allows to verify the coher- ence of the information provided by en- tities under the supervision of the CSSF to this institution and to the ACD. This also means that any inconsistencies be- tween regulatory filings and tax declara- tions could raise red flags, leading to potential audits or investigations. Tax Compliance in a DigitalAge Insights fromChristianMertesdorf, Global Compliance & Reporting (GCR) Partner, EY Luxembourg Luxembourg’smove towardsdigitalized tax compliance is evident in the com- pressed tax return timeline for 2025. Busi- nesses will have a shorter window between the publication of tax forms in April and thefilingdeadlineat the endof the year, placing additional pressure on compliance teams. The reliance on tech- nology and automationwill be critical in managingtaxobligationseffectively.His- torical filing patterns indicate that De- cember remains the peak submission period, underscoring the need for better workflowdistributionandproactivedata collection. As tax authorities push for in- creased digitization, businesses must adapt by refining internal processes and investing in digital compliance tools. ESG in Tax Governance Insights fromJean-BernardDussert, Transfer Pricing Partner, ESG Tax Leader & Anna Illarionova, Consulting Senior Manager, ESG Services, EY Luxembourg Sustainabilityisnolongerjustaregulatory obligation – it is becoming a fundamental aspect of tax and corporate governance. The new investment tax credit scheme in Luxembourg is designed to further stim- ulate ESG investments by providing sig- nificant tax benefits to eligible projects focusing on digital transformation or en- vironmental and ecological transition. Theseprojectscouldbenefitfromarevised tax credit of 18% reducing their tax payable that creates additional incentives for the enterprises that create long-term sustainable value. Onanothernote,on26February2025,the EUCommissionpublished the first Om- nibus Package (the Simplification Pack- age)which aims to simplify the sustaina- bility reporting framework aligning re- quirements among Corporate Sustainabil- ity Reporting Directive (CSRD), EU Taxonomy and Corporate Due Diligence Di- rective (CS3D). This initiative will review thescopeofcompaniesthatwouldreport on ESG-related material aspects as cli- matechange,people,communities,ethics and governance. At the same time, the Sustainable Finance Disclosure Regulation (SFDR) con-tinuestoevolve,introducing stricter fund naming guidelines and mandating at least 80% of assets in sus- tainable funds to meet ESG objectives. This places asset managers under pres- sure to ensure alignment between fund strategies supportedby reliableESGdata and simplified reporting obligations for the underlying companies. Finance leaders recognize the increasing complexity of ESG integration. The role of CFOs is changing, as investors expect them to have a stronger hand in value creationandbalancing long-termsuccess with the executive team’s pressure for short-term results. These increased de- mands also reflect a growing need to ac- cess expertise from outside the organizations. While ESG compliance has become a priority, many firms re- main in a minimum compliance mindset, focusing on regulatory adherence rather than proactive ESG integration. Moreover, the adoption of digital solu- tions includingAI for ESG reporting still remains surprisingly low, highlighting a gapbetweenregulatoryexpectationsand current market practices. To stay ahead, firmsmust transition fromreactive com- pliancetoamorestrategicESGapproach, embedding sustainability into their tax and financial planning processes. Conclusion The 2025Asset Servicers TaxRoundtable provided a comprehensive analysis of Luxembourg’s shifting tax landscape, covering new fiscal incentives, VAT re- forms, compliance challenges, and the role of ESG in tax governance.As tax au- thoritiesintensifyscrutinyandregulatory frameworks become more complex, firms must proactively adapt their com- pliance strategies to remain ahead of the curve. The growing push for digitaliza- tion will play a key role in streamlining tax processes, while ESG continues to shape corporate governance policies. EY Luxembourg remains committed to supporting asset servicers through these changes, offering insights and strategic guidance to navigate the evolving tax and regulatory environment. ©EY L e Vice-Premier ministre, mi- nistre desAffaires étran- gères et du Commerce extérieur, ministre de la Coopéra- tion et de l’Action humanitaire, Xavier Bettel, a effectué du 9 au 11 mars 2025 une visite de travail en Israël et en Palestine. Il s’agit de la 4 e visite de travail de Xavier Bettel en Israël et en Palestine depuis l’attaque du 7 octobre 2023, témoi- gnant de son engagement pour la paix et de sa volonté à contribuer à la recherche d’une solution au conflit actuel. Du côté israélien, leministre Bettel a ren- contré leministredesAffaires étrangères, Gideon Sa’ar, et le ministre des Affaires stratégiques,RonDermer.Du côté pales- tinien, le ministre Bettel s’est entretenu avec le Premier ministre et ministre des Affaires étrangères, Mohammad Mus- tafa, et le Gouverneurde l’Autorité mo- nétaire palestinienne, Yahya Shunnar. Au centre des discussions ont figuré le cessez-le-feu à Gaza et la libération des otages. À cet égard, le ministre Bettel a saisi l’occasion de ses différentes en- trevues pour souligner l’importance primordiale de préserver le cessez-le- feu actuel. Danscecontexte,ilexhorteles parties à faire preuvede responsabilité et s’engager de manière constructive dans la négociation des phases ultérieures de l’accord afin de contribuer à assurer sa pleine mise en œuvre, dans l’objectif de faire libérer les otages israéliens et parve- nir à la fin définitive des hostilités. Face à la situationhumanitaire àGaza, le ministre Bettel a également exprimé sa profonde inquiétude face à la décision prisepar Israël de suspendre toute entrée de biens et de fournitures (y compris l’électricité, le pétrole et l’eau) àGaza, ap- pelantIsraëlàrespectersesobligationsin- ternationales afin de garantir la fourniture complète, rapide, sûre et sans entrave de l’aide humanitaire à la popu- lation de Gaza. Outrel’urgenceabsoluedepréserverl’ac- cord de cessez-le-feu à Gaza, le ministre Bettelaréitérélebesoinpourunesolution politiquedurableauconflit israélo-pales- tinien, basée sur la solution à deux Etats ; car lapaixde laPalestine sera lapaixd’Is- raël, et vice-versa. Enfin, Xavier Bettel a également rencon- tréunreprésentantlocalduComitéinter- national de la Croix-Rouge pour un échange sur la situation humanitaire à Gaza et le rôle du CICR dans l’échange des otages et prisonniers. Source :ministèredesAffairesétrangèreseteuropéennes Déplacement de Xavier Bettel en Israël et en Palestine : «La paix de la Palestine sera la paix d’Israël » ©MAE