To set out the procedures for the implementation of the mutual agreement procedure (MAP), on 28 August 2017, the Director of Taxes published Circular L.G. Conv. D.I. No. 60. The MAP intends to eliminate legal and economic double taxation.
The MAP applies to harmonize the interpretation and application of the tax treaty in both contracting states. Access to the mutual agreement procedure must be as broad as possible for taxpayers fulfilling the conditions. Access shall be granted where there is an application of anti-abuse provision provided for either by a tax treaty or by domestic law.
By commencing the mutual agreement procedure, Luxembourg will try to solve the issue via a unilateral action, such as recovering the amount paid or granting relief to the applicant. However, once the mutual agreement procedure is commenced, all the refund may not be granted until the procedure ends.
