On 22 February 2019, Luxembourg tax authorities issued a new circular (No.19) that clarifies recently added the new Permanent Establishment (PE) definition as set forth in article 16(5) of the Tax Adaptation Law (StAnpG).
Under the new paragraph, the Tax Authorities may require a taxpayer to prove that the other Contracting State actually recognizes a PE in its territory. The circular clarifies how the taxpayer should provide this proof.
The new paragraph 5 applies to tax years beginning on or after 1 January 2019.
