Luxembourg has recently announced its first tax amnesty plan for undeclared income. The temporary tax amnesty scheme for 2016-2017 aims at “laundering” tax evaders and regulating “assets and income held by persons with tax residence in Luxembourg.”
According to the current Luxembourg legislation, sanctions for a willful tax fraud and evasion include (i) a fine of up to twice the amount of the tax evaded and (ii) a jail term ranging from one month to five years. To qualify for the new 2-year-long tax amnesty plan, taxpayers have to meet two conditions, namely, (i) to submit “a corrective statement” to Luxembourg tax administration and (ii) to pay the full amount of the tax due.
If unpaid taxes are reported in 2016, an additional 10 percent withholding tax on the amount of unpaid taxes applies. If the unpaid taxes are reported in 2017, the rate of the additional withholding tax increases to 20 percent. In order to use the amnesty advantages, qualifying taxpayers are requested to submit a single declaration which lists “all assets held and income received which remained unregistered.”
Luxembourg taxpayers who have previously been involved in administrative and juridical tax evasion procedures are not allowed to use the benefits of the tax amnesty scheme.