Tax disputes

Tax procedure in Luxembourg

Tax litigation in Luxembourg

Tax litigation in Luxembourg falls under two branches of the judiciary system: Administrative Courts and Judicial (Civil) Courts. Direct taxes, such as corporate income tax and net wealth tax, fall under the jurisdiction of Administrative Courts, while indirect taxes, including VAT and registration fees, are subject to Judicial (Civil) Courts.

It should be noted, however, that an appeal to the Courts must be preceded by an initial phase of administrative complaint.

Litigation in direct taxes

Three avenues of appeal are possible before the Direct Tax Administration: complaint, formal hierarchical appeal and request for tax remission.

The complaint

To challenge a tax notice, the complaint must be lodged with the Director of the Direct Tax Administration within 3 months of notification of the notice.

This complaint must comply with statutory conditions. It must be in writing and may contain the reasons, although this is not mandatory. A complaint is sent by the taxpayer or by a representative (lawyer, accountant with a power of attorney ad item). Additionally, a complaint can be made orally to the tax office employee.

Submission of a complaint does not exempt the tax (or tax advances) from being paid.

In principle, the Director must then take a position on the complaint within a period of 6 months. In the event of a negative response, the taxpayer may bring an appeal against the decision of the Director of the Direct Tax Administration before the Administrative Tribunal within a maximum period of 3 months. If a response is not received within the 6-month period, an appeal before the Administrative Tribunal is also possible, without there being a time limit to be respected in this case.

If the Administrative Tribunal makes an unfavorable decision, an appeal may be filed. The appeal of the decision of the Administrative Tribunal must then be lodged within 40 days with the Administrative Court, which has the final say.

Formal hierarchical appeal

A formal hierarchical appeal may be lodged in the same forms and within the same time limits as above before the Director of the Direct Contributions Administration against any discretionary decisions taken by the tax office, such as the refusal of a payment deadline. The procedural rules are comparable to those described above for the complaint, except that the absence of a response from the director does not allow the administrative tribunal to be appealed.

Gracious remission

The taxpayer may consider that the collection of the tax is unfair¹ and ask for a graceful remission without objecting to the legality of the tax assessment. The relevant procedural rules are identical to those of the formal hierarchical appeal.

Litigation in indirect taxes

This is mostly about appeals against VAT correction notices.

The VAT is a self-assessment system, which is different from income taxes. The tax office has a verification role, and if it observes that the VAT return has been incorrectly filled or is missing, it issues a VAT correction notice.

A VAT correction notice can be challenged through the following steps:

1. First, the taxpayer must file a written complaint with the tax office that issued the assessment. This complaint must be accompanied by a detailed rationale.

2. If the tax office rejects the complaint, the matter will automatically be passed to the Director of the VAT Authorities, who will issue a decision.

3. If the taxpayer disagrees with the Director's decision, it is possible to appeal to the District Court's civil chamber.

1. Unfair taxation per se or a failure to pay due to particular circumstances.