The mandatory disclosure regime (“MDR”) requires intermediaries (that are tax advisers and other service providers) to report certain cross-border arrangements to the Luxembourg tax authorities. The MDR is the transposition of DAC 6 that required the implementation of the MDR in all European Member States.
The MDR operates through a system of hallmarks that may trigger reporting obligations and the main benefit test (“MBT”) that functions as a threshold requirement for many of these hallmarks. As such, the MBT should filter out irrelevant reporting and enhance the usefulness of the information collected because the focus will be on arrangements that have a higher probability of truly presenting a risk of tax avoidance. When applicable, the MBT sets a fairly high threshold for reporting under the MDR.
Today, potential reporting obligations under the MDR are an integral part of each and every tax analysis and should be considered at an early stage. This ensures that taxpayers can take into account potential reporting obligations in their decision as to whether or not to implement a certain cross border arrangement. This on its own achieves the desired deterrence effect as both intermediaries and taxpayers will need to carefully consider potential reporting obligations.
The MDR introduced some vague definitions and concepts that can, at times, make it difficult for practitioners to determine whether or not a specific cross-border arrangement is reportable. However, for taxpayers it is important that the reporting in Luxembourg and across Europe is as consistent as possible. Therefore, intermediaries and taxpayers have to allocate appropriate resources to ensure compliance with the MDR.
This book is a practical guide that analyses the scope and limits of the MDR in Luxembourg, and provides readers with a practical perspective on all facets of this reporting regime.
Oliver R. Hoor is a Partner in the International and Corporate Tax department of ATOZ.
A tax professional since 2003, Oliver has experience in Luxembourg and international taxation with a focus on alternative Investments (private equity, real estate, sovereign wealth funds, hedge funds), mergers & acquisitions and multinational groups. Oliver advises clients on all direct tax aspects regarding deal structuring, maintenance, reorganisations and exit planning.
He is Head of Transfer Pricing and the German Desk. Oliver is further a member of the tax working groups of the Association of the Luxembourg Fund Industry (ALFI) and the Luxembourg Private Equity Association (LPEA).
Oliver is the author of more than 300 articles and books on Luxembourg and international taxation including Transfer Pricing and related documentation requirements, the OECD Base Erosion and Profit Shifting (“BEPS”) Project and the EU Anti-Tax Avoidance Directives (ATAD 1 & 2), reporting obligations of tax intermediaries (DAC 6), current initiatives of the EU Commission in the field of direct taxation (ATAD 3, BEFIT, DEBRA, SAFE, DAC 8, …), the OECD Model Tax Convention and Tax Treaties, EU Law and the State Aid investigations of the EU Commission. He is also a regular speaker at conferences as well as a lecturer with Legitech and ILA.
Oliver is qualified as a Chartered Accountant in Luxembourg (“Expert-Comptable”) as well as a certified German tax adviser (“Steuerberater”). He holds a post-graduate degree in Luxembourg Tax and a degree in Business Administration with a major in Tax from the University of Applied Sciences of Trier (Germany).
I. Introduction
1. The MDR in Luxembourg
2. Design principles of a mandatory disclosure regime
3. Implementation of DAC 6 in the European Union
II. Key features of the MDR
1. Overview
2. Reportable arrangements
3. Information to be reported
4. Reporting responsibilities
5. Overlapping reporting obligations
6. Timing aspects
7. Penalties
III. The hallmarks of reportable arrangements
1. Overview
2. Hallmarks that are linked to the MBT
3. Hallmarks that are not linked to the MBT
4. Checklists: Hallmarks of reportable arrangements
IV. The Main Benefit Test
1. Overview
2. Guidance provided by the Luxembourg tax authorities
3. Considerations regarding international investments
4. Developing a reasonable approach
5. Appendix
V. Case studies
1. The real estate fund
2. The multinational group
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