Tax procedure in Luxembourg
Tax litigation in Luxembourg
Due to the heterogeneity of the sources of Luxembourg tax law, tax litigation falls under two branches of the Luxembourg jurisdiction: administrative courts and judicial courts. Direct taxes fall under the jurisdiction or administrative courts, judicial courts have exclusive jurisdiction over indirect taxes such as VAT and registration fees.
It should be noted, however, that an appeal to the courts must be preceded by an initial phase of administrative complaint.
Litigation in the area of 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 formal conditions: it must be in writing and may contain the reasons, although this is not, surprisingly, mandatory. The complaint is sent either by the taxpayer or by a representative (lawyer, accountant with a power of attorney ad item). A complaint can also be made orally to the tax office employee.
Submitting a complaint does not exempt the tax (or tax advances) from being paid.
The Director must then take a position on the complaint, in principle within a period of 6 months. In the event of a negative response, the taxpayer may appeal against the decision of the Director of the Direct Tax Administration before the Administrative Tribunal within a maximum period of 3 months, through a lawyer or a chartered accountant. In the absence of a response 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.
In the event of an unfavourable decision by the Administrative Tribunal, an appeal may be lodged. 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, without contesting the legality of the tax bulletin, may consider that the collection of the tax is incompatible with equity (unfair taxation in itself or inability to pay due to particular circumstances) and as a consequence request a graceful remission. The procedural rules are identical to those of the formal hierarchical appeal.
Litigation in indirect taxes
This mainly concerns appeals against VAT correction notices.
Unlike income taxes, the VAT is a self-assessment system. The tax office has only a verification role and if it observes that the VAT return has been incorrectly filled or is missing, it issues VAT correction notice.
Such a VAT correction notice can nevertheless be contested through the following steps:
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Negotiation phase: As a first step, the taxpayer must file a written complaint with the tax office that issued the assessment. This complaint must be accompanied by a detailed justification
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Escalation to the director: If the tax office rejects the complaint, the matter is automatically escalated to the Director of the Indirect tax office who will issue a decision.
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District Tribunal appeal: If the taxpayer disagrees with the Director’s decision, an appeal with the Civil Tribunal is possible.
