LUXEMBOURG: Mandatory Disclosure Regime – a status update.

By added on 28/05/2019

As extracted from, published on Tuesday 28th May, 2019.


The new Mandatory Disclosure Regime (“MDR”), which entered into force on 25 June 2018 by virtue of the EU Council Directive DAC 6, requires “intermediaries” to report transactions and tax arrangements considered to be “potentially aggressive”. If no relevant intermediaries are involved, the obligation will shift to the taxpayers concerned.

Cross-border reportable arrangements which have a first implementation step that occurred on or after MDR entered into force, will have to be reported no later than 31 August 2020.

ember States have until 31 December 2019 to transpose the directive into national law. Yet, after almost 11 months since MDR entered into force, Member States are at different stages in their implementation of the directive.

On 1 January 2019, Poland was the first country to transpose DAC 6 into national law, with a scope much larger than the final text of the directive (e.g. certain domestic arrangements or, intermediaries without a Polish nexus are included) and a very high penalty threshold.

Poland is followed by a second group of Member States – including Germany, The Netherlands, Cyprus, the Czech Republic, Italy, Slovakia, Slovenia, Sweden and France – that have issued a draft law. With the exception of Germany and Sweden who, similarly to Poland, consider certain domestic transactions to be in the scope of the reporting requirements, this second group of Member States is generally proposing a final text that is close to the wording of the directive.

The third group of Member States – including Austria, Belgium, Estonia, Finland, Ireland, Luxembourg (currently working on draft legislation), Portugal, Romania, Spain and the UK – is in the process of seeking relevant feedback in formal or informal discussions with various market players e.g. lobbying associations and drafting their implementation texts.

Finally, there is a group of Member States where no significant activity has yet taken place - Bulgaria, Croatia, Denmark, Greece, Hungary, Latvia, Lithuania, and Malta.

nterestingly, from an analysis of the draft texts already made available for public consultation, most Member States seem to be willing to exempt lawyers and law firms from the obligation to report.

As far as penalties are concerned, the proposed amounts vary, for example:

For failure to file a disclosure by the reporting deadline: fine of EUR 25,000 in France, Cyprus and Germany and EUR 830,000 (one-off) in the Netherlands.

In Belgium, the first infringement will not be subject to a fine. However, the second infringement will be fined between EUR 250 - 1,250 per infringement/day the reporting is overdue.

In the Czech Republic, a fine of CZK 1,500,000 (circa EUR 58,000), is proposed for failure to file disclosure by the reporting deadline; or failure to provide information concerning the LLP exemption.

In Sweden, a fine of SEK 7,500 (circa EUR 700) is proposed for the relevant taxpayer or SEK 15,000 (circa EUR 1,400) for an intermediary, should there be late, incorrect or incomplete reporting. If the delay is more than 60 days after the reporting deadline, the fine will be SEK 25,000 (circa EUR 2,300) for the relevant taxpayer or SEK 50,000 (circa 4,600) for an intermediary.

In relation to the preferred reporting system to be adopted by the Luxembourg tax authorities, so far there has been no disclosure. There is an evident preference in the market place for a simple, clear format, that helps both taxpayers and intermediaries to use it for their own reporting obligations, i.e. a system that allows a low- and high- volume of reports to be processed by the Luxembourg tax authorities’ website/interfaces. Discussions are ongoing as to which would be the preferred model - a “FATCA/CRS” model versus, for example, the “corporate income tax returns” model.

By 31 December 2019, we expect that relevant legislation will have been adopted by most Member States, but whether guidance will be issued by the Member States at the same time remains to be seen.