Late tax filings in Luxembourg: catch up before the ex officio assessment.

What happens when a tax return is not filed in Luxembourg?

The administration ends up assessing the tax itself, on an estimated base. For corporate income tax, the modèle 500 return for year N is due by 31 December of year N+1. After that date, the Luxembourg direct tax administration (ACD) may apply a late-filing surcharge of up to 10% of the tax (§ 168 of the general tax law), then send a formal notice with a penalty payment whose amount depends on how serious the delay is (§ 202).

If the return still does not arrive, it issues an ex officio assessment (§ 217): the profit is set by estimate, without your deductible expenses or loss carry-forwards, and the assessment is enforceable. Late-payment interest runs at 0.6% per month from the end of the month following receipt of the assessment.

For VAT the mechanism is similar but falls under the registration and VAT administration (AED). VAT returns are filed on eCDF before the 15th of the following month or quarter, and the annual return before 1 May. Where nothing is filed, the AED is authorised to assess the tax due ex officio on the presumed amount of transactions (art. 74 of the VAT law). It may add a tax fine of EUR 250 to EUR 10,000 per infringement, and a fine of up to 10% per year of the unpaid tax in case of non-payment (art. 77).

The third front is the trade register: unfiled annual accounts block the tax return, which depends on them, and expose the company to increased fees and then a penalty payment, as described in our article on late filing of annual accounts. A late file is therefore handled on three fronts at once, which explains the working order described below.

In what order should several late financial years be regularised?

First the objections whose deadline is still running, then the accounts from the oldest year to the most recent, finally the filings in the same order. The objection comes first because its three-month deadline is a strict time bar: it is not extended, even if the accounts are not ready. A reasoned objection on principle, completed later by the real return, preserves the right to replace the estimate with your figures.

The accounts are then rebuilt in chronological order, because each year opens the next: the closing balance sheet of year N is the opening balance sheet of year N+1, and loss carry-forwards, depreciation and tax advances pass from one year to the next. Rebuilding the most recent year first means redoing everything once the earlier years are finally known. The annual accounts of each year are prepared and filed, followed by the corporate tax return derived from them.

VAT returns follow the same principle, period by period, with one point of attention: the annual return recapitulates the periods of the year, and an annual return filed before the missing periodic returns creates discrepancies the AED will spot. The filing frequencies (monthly above EUR 620,000 of turnover, quarterly between EUR 112,000 and EUR 620,000, annual below) are detailed in our article on VAT return frequency.

Can an ex officio assessment still be contested?

Yes, within three months of notification of the assessment, by written objection addressed to the director of the ACD (§ 228 of the general tax law). Notification is presumed to take place on the third working day after posting. The objection has no suspensive effect: the tax assessed ex officio remains payable during the review, which is precisely why a real return must follow quickly.

The director has six months to decide; after that period, silence counts as rejection and allows the taxpayer to bring the case before the administrative tribunal. An express decision is contested within three months by an appeal for reversal, and the judgment by an appeal to the administrative court within forty days, a stage where a lawyer is indispensable.

For VAT, the rectification or ex officio assessment is contested within three months of its notification by a written, reasoned objection filed with the competent tax office, which refers the matter to the director of the AED if it rejects it (art. 76 of the VAT law). The appeal against the director's decision, or against six months of silence, goes to the Luxembourg district court sitting in civil matters, by writ of summons, which requires a lawyer.

After three months without an objection, the assessment is final. Two narrower routes remain: a request for remission on equitable grounds, which does not dispute the legality of the tax but the ability to pay it, and a request for payment terms. The request for remission is addressed to the director of the ACD by 31 December of the year following the year in which the assessment was issued; the director decides within six months and silence counts as refusal (Guichet.lu, "Contester une décision de l'ACD").

In both cases, filing the real return improves the company's position, because the administration then knows what it is discussing. When the file goes to litigation, we prepare the documents and work with your lawyer or with a lawyer we recommend. This part is described on our tax audit assistance page.

How much does regularising late tax filings cost?

Catch-up work is billed per financial year and per return, at the current fee schedule: EUR 800 excl. VAT for a corporate tax return (modèle 500), EUR 1,000 excl. VAT for one year's annual accounts with their eCDF filing, EUR 220 excl. VAT per monthly VAT return, EUR 230 excl. VAT per quarterly return, EUR 100 excl.

VAT for a simplified annual return and EUR 500 excl. VAT for a recapitulative annual return. Reconstruction of the accounts and drafting of objections are billed on time spent, EUR 150 excl. VAT per hour for a senior accountant and EUR 250 excl. VAT per hour for the managing director of the firm.

What moves the bill is the state of the documents, not the number of years. A year with complete bank statements and sorted invoices is rebuilt in a few hours of entry; a year with no invoices, closed bank accounts and unexplained movements requires enquiries with third parties and duplicate requests. The initial diagnosis prices these two situations year by year before the firm quote. The full schedules are on our VAT fees and accounting fees pages.

On top of these fees come the amounts owed to the administration: tax, surcharge, interest and fines. Regularisation fees are a deductible expense of the year in which they are incurred; fines and late-payment interest relating to the company's income taxes are not, and VAT adjustments follow the VAT regime, deductible or not according to the right of deduction attached to the operation. Once the file is up to date, the company moves into routine compliance, described on our change accountant page, which avoids repeating the same situation.

How does the catch-up engagement unfold?

In five steps, in an order that does not change: diagnosis of letters and deadlines, urgent objections, chronological reconstruction, filings in sequence, closing with advances brought back to level. The diagnosis starts with reading each letter from the ACD and the AED, because the notification dates appear there and determine what can still be contested. You receive a calendar of the deadlines running and the list of documents to gather.

The firm works under a mandate filed with both administrations, which allows it to consult your VAT account on eTVA-C and your assessments, and to answer requests for information directly. Exchanges with the administrations are documented and passed on to you. The company remains the legal counterpart: objections are signed by its legal representative on the basis of our drafts.

Where the company has ceased all activity and the regularisation prepares a closure, the engagement is coordinated with the liquidation: a company cannot be wound up cleanly with undeclared financial years, and regularisation is then the first step in the closing timetable.