Hallmark E3 (Business Restructuring) of the Mandatory Disclosure Regime (DAC 6): What about Liquidations and Cross-border Mergers?

Under the mandatory disclosure regime (‘‘MDR’’), tax intermediaries such as tax advisers, accountants, and lawyers that design, promote or provide assistance in regard to certain cross-border arrangements may have to report these arrangements to the tax authorities.

The MDR operates through: (1) a system of hallmarks (that are characteristics or features of cross-border arrangements) that may trigger reporting obligations, and (2) the main benefit test (‘‘MBT’’)1 that functions as a threshold requirement for many of
these hallmarks. However, hallmark E3 (Business Restructurings) is not subject to the MBT and thus triggers automatic reporting obligations.

This article analyses the extent to which the liquidation or cross-border merger of a Luxembourg company may fall within the scope of hallmark E3, given that the guidance provided by the Luxembourg tax authorities in an FAQ raised some concerns in this respect.