Luxembourg Introduces Legislation for GloBE Information Sharing, Exchange, and Administrative Guidance on Article 9.1
The Luxembourg Government has submitted a Draft Law on 24th July 2025, aiming to implement the Top-up Tax Information Return (TTIR) and facilitate automatic exchange of information, effective from 1st January 2026.
The Draft Law, if passed, will amend the Pillar Two Law and clarify the treatment of deferred tax assets and liabilities that arose prior to the application of the Pillar Two Law. The legislation will incorporate OECD Administrative Guidance on Article 9.1 to achieve this.
For deferred tax assets related to the introduction of a new corporate income tax, a two-year grace period applies to fiscal years beginning on or after 1st January 2025 and before 1st January 2027. The maximum amount that may be included in the grace period is 20% of the deferred tax asset's amount originally recorded.
The Draft Law also proposes a two-year grace period for certain deferred tax expenses, applicable to fiscal years starting from 1st January 2024 to 1st January 2026. This grace period includes all fiscal years beginning in calendar years 2025 or 2026 but not including a fiscal year that ends after 30th June 2028.
The affected countries with which Luxembourg will conclude an "eligible competent authority agreement" to enable the automatic exchange of specific sections of the TTIR are those jurisdictions that participate in the DAC9 framework and the Multilateral Competent Authority Agreement on the Exchange of GloBE Information (GIR MCAA).
The Draft Law introduces the standardized TTIR form to be used by Luxembourg-based constituent entities to meet their information return filing obligations. The legislation also requires Luxembourg Tax Authorities to automatically exchange specific sections of the TTIR filed by Luxembourg constituent entities with other relevant jurisdictions, provided there is an "eligible competent authority agreement" in place.
The Draft Law proposes amendments to the Pillar Two Law, focusing on deferred tax assets arising from certain tax benefits provided by the General Government. The legislation also excludes deferred tax assets and liabilities arising from a difference in value following the introduction of a new corporate income tax after 30th November 2021.
The Draft Law also introduces the possibility for constituent entities located in Luxembourg to opt for a simplified TTIR filing during a transitional period, which includes all fiscal years beginning before 1st January 2029 and ending before 1st July 2030.
The Draft Law further establishes procedures for collaboration on corrections, compliance, and enforcement of TTIR obligations. It also introduces a penalty of up to €300k for any Luxembourg constituent entity that has wrongly claimed the exemption from local filing of the TTIR.
The Draft Law proposes excluding deferred tax assets resulting from a discretionary agreement or election made after 30th November 2021. The legislation also introduces a two-year grace period for a portion of the deferred tax expenses attributable to the reversal of deferred tax assets described above.
The Draft Law, if passed, will enter into effect on 1st January 2026, with the provisions incorporating the OECD Administrative Guidance being effective for financial years starting from 31st December 2023 onward. The legislative process may take a couple of months before the Draft Law becomes law.
