Multilateral instrument: Bill of Law

On 7 June 2017, Luxembourg together with 67 other jurisdictions, signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (“Multilateral Instrument” or “MLI”). One of the main purposes of the MLI is to update international tax rules and lessen the opportunity for tax avoidance by multinational enterprises by transposing the results from the BEPS project into more than 2,000 tax treaties worldwide.

On 3 July 2018, the Luxembourg Government submitted Bill of Law 7333 approving the MLI to the Luxembourg Parliament.

All 81 tax treaties concluded by Luxembourg that are currently in force are designated as “Covered Tax Agreements” (“CTAs”). However, the extent to which these CTAs will be amended as a result of the MLI will depend on whether or not the other contracting state signed the MLI and on the reservations and options taken by the signatory contracting state.

The MLI contains agreed minimum standards to counter treaty abuse (BEPS Action 6) and to improve dispute resolution mechanisms (BEPS Action 14). It also contains a number of alternatives or optional provisions that will generally apply only if all contracting states to a CTA have chosen to apply that particular alternative or option.

For more details regarding the MLI and the reservations and options chosen by Luxembourg, see the article "Bill of Law on the Multilateral Instrument" published on our website.