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Context of increased vigilance from tax administrations
In recent years, European tax administrations — including the Administration of Direct Contributions (ADC) in Luxembourg — have significantly intensified their control and investigation measures.
This trend is part of a broader logic of tax transparency, automatic exchange of information, and the fight against aggressive tax optimisation.
Controls are no longer limited to large multinationals: SMEs, holdings, and wealth structures are now regularly targeted, especially when their cross-border flows attract the attention of the authorities.
Particularly sensitive areas of control
Recent experience shows that several themes are currently receiving particular attention from the ADC:
- Transfer Pricing (Transfer Pricing)
- Real economic substance
- VAT and e-commerce
- IRC/ICC/IF taxes and unjustified deductions
- a. Wealth tax returns are compared to submitted balance sheets, and unexplained discrepancies may trigger a request for information.
- b. Provisions and other inappropriate values are among the frequent control points.
The new tools of the administration
The Luxembourg administration now benefits from:
- Cross-referenced databases(bank files, cadastre, RC, international data),
- Automatic access to information transmitted by other EU member states,
- And ofalgorithmic analysis tools to detect accounting or tax anomalies.
Controls are therefore more targeted, faster, and better documented than before.
Requests for information are multiplying.
“The era when tax audits were rare in Luxembourg is over.”
Carlos Marques
Chief Executive Officer of Excelia
The Luxembourg administration now operates within a European logic of compliance and total transparency.
Companies, whether local or international, must adopt a culture of proactive compliance, under threat of significant adjustments or financial penalties.