Administrative claim before the Director of the ACD: act quickly and comply with formal requirements
The administrative claim is the mandatory first step to challenge a tax adjustment in Luxembourg. From the date you receive the tax adjustment notice, you have three months from its notification to file a claim with the Director of the ACD. This three-month deadline is strict: once it has expired, the adjustment becomes final, except for very limited discretionary remedies. It is therefore crucial to act without delay as soon as you are notified of the contested tax assessment. Note that the date of receipt is generally presumed to be the third working day following postal dispatch within Luxembourg (and slightly later if sent abroad).
The form of the claim must be carefully prepared in order to be admissible. The following elements are essential and must be included in your challenge letter:
Taxpayer details: indicate your name (or the company’s legal name), first name, address, and tax identification number.
Identification of the contested decision: specify precisely which document you are challenging – for example, “income tax assessment no. X relating to the year YYYY issued on …”. The Director of the ACD must be able to clearly identify the adjustment concerned.
Grounds for the challenge: set out, in a structured manner, the facts and legal arguments that, in your view, demonstrate the error or excessiveness of the additional tax assessment. You must justify why the adjustment is unfounded or exaggerated (for example, by providing supporting documents, explaining the tax treatment applied, and citing the relevant legal provisions). Be precise and factual in your explanations.
Purpose of the claim: state what you are requesting, for example the cancellation of the adjustment amount or the correction of the tax calculation. In other words, indicate the outcome you are seeking.
Send this written claim directly to the Director of the ACD (Litigation Division), or submit it via your tax office, which will forward it to the Director. Please note: a simple phone call or email is not sufficient—only a written submission by post (or hand delivery), or possibly an oral challenge formally recorded in minutes at the tax office, is admissible. In practice, a registered written submission is the preferred route to retain formal proof.
It is important to stress that filing a claim does not suspend enforcement of the adjustment pending the decision. In other words, the ACD will require payment of the assessed tax even while the challenge is ongoing. If you later succeed, the administration will of course refund any overpaid amounts; however, in the meantime, you must settle the sums due to avoid late-payment interest or enforcement measures. This rule can weigh on your company’s cash flow and should therefore be factored into your strategy.
Once your claim has been filed, the ACD’s litigation department will review your case. In principle, the Director of the ACD has six months to take a position and notify you of the decision on your claim. In the best-case scenario, the administration may acknowledge its error or reach a compromise and rule partially or fully in your favor. However, it is not uncommon for the ACD to maintain its initial position. If, in its response (known as the decision on the claim), the Director rejects all or part of your challenge, or if you receive no response after six months, you may then proceed to the next judicial stage if you wish to pursue the dispute.
Appeal before the Administrative Court: taking the dispute to court
If the Director of the ACD’s response is unfavorable, or if no response is received within six months, you may refer the matter to the Administrative Court of the Grand Duchy of Luxembourg. This judicial appeal must generally be filed within three months following either the notification of the rejection (in whole or in part) of your claim by the Director, or the expiry of the six-month period without a response (implicit rejection). This is an action for reformation, meaning that the court will reassess the merits of the tax assessment and may amend the amount of tax if your appeal is upheld, thereby replacing the administration’s decision with its own. In short, the administrative judges have the power to rule in favor of the taxpayer and reduce or cancel the contested tax adjustment.
Proceedings before the Administrative Court are subject to specific procedural rules. Your appeal will take the form of a reasoned written application, again setting out the facts, legal arguments, and supporting evidence for your position. This stage of litigation is more formal: although, in theory, you may represent yourself before the Administrative Court (a lawyer is not mandatory at first instance), it is strongly recommended to seek assistance from a tax lawyer or a tax law expert. Before the court, both the procedure and the arguments become technical (exchange of written pleadings, hearing, compliance with judicial formalities). A professional experienced in tax litigation will know how to present your case optimally, in accordance with Luxembourg law, and how to highlight the legal weaknesses of the adjustment. Furthermore, if your company is concerned, representation by a lawyer is de facto necessary, as legal entities act before the courts through a lawyer admitted to the bar.
Before the Administrative Court, the dispute therefore opposes your company (the taxpayer) to the ACD, represented by the administration. The court will examine in particular whether the adjustment complied with the law and the facts. Each party will be able to argue its case: the ACD will justify the additional assessment, while you will seek to convince the judges of the illegitimacy of the adjustment (for example, by demonstrating a misinterpretation of tax law, a calculation error, a breach of a procedural guarantee such as the right to be heard, or any other defect). Your arguments must therefore be robust and well-supported. It is almost like “replaying the match” before a neutral referee—the court—with the possibility of a different outcome from that decided by the administration.
A reassuring point for entrepreneurs: the Administrative Court is independent of the ACD and examines disputes impartially. If you have strong arguments, there is a real chance that the judge will correct the assessment. Conversely, if the court dismisses your claim and deems the adjustment justified, you may still, as a last resort, appeal to the Administrative Court of Appeal within 40 days. The case will then be reviewed at second instance, but at that stage representation by a lawyer is mandatory and the costs can be significant. In practice, most tax disputes are resolved at first instance; appeals are pursued only for major stakes or important points of law.
Tips to maximize your chances of success in a tax dispute
What are your chances of success when challenging an ACD adjustment? There is no universal answer, as everything depends on the strength of your case and the soundness of your legal position. However, it is certain that a rigorously prepared challenge has a far greater chance of succeeding. The tax administration will not reconsider its initial position unless you present convincing evidence. Likewise, judges will only cancel an adjustment if you clearly demonstrate that it is unfounded in law or in fact. Here are some best practices to put all the odds in your favor:
In-depth analysis of the adjustment: Start by fully understanding the grounds for the adjustment. What correction has the ACD made, and on what legal basis? It is essential to master the technical and legal details of the dispute. An effective defense requires a thorough analysis of the legal and technical foundations of the contested reassessment. This involves reviewing the applicable tax provisions, relevant case law, and the qualification of the facts as retained by the administration. Identify precisely where you believe the ACD has erred or has interpreted tax law in a questionable manner.
Gather evidence and supporting documents: Substantiate your claims with concrete documents. For example, if the adjustment concerns the reintegration of an expense you consider deductible, provide documents justifying that expense and its link to professional activity. If it is an increase in taxable income, supply the accounting or contractual elements explaining the original treatment. The more thoroughly documented your file is, the harder it will be for the administration or the judge to disregard it.
Careful written argumentation: Whether in the claim letter or in submissions before the court, clarity and structure of your arguments are paramount. Present your arguments in a pedagogical manner, avoiding unnecessary jargon while remaining precise on points of law. Highlight the weaknesses in the administration’s position and build a solid legal argument to exploit them. For example, if the adjustment contradicts an administrative circular or established case law, emphasize this point.
Respect the adversarial process: In tax matters, procedural compliance is essential. Ensure that the ACD gave you the opportunity to respond before issuing the adjustment (proposal for rectification stage). If not, you may be able to invoke a procedural defect. More generally, keep records of all correspondence with the tax authorities and ensure that you respond within deadlines to information requests during a tax audit. These elements may be useful to demonstrate your good faith and, where applicable, a failure by the administration to meet its obligations.
Seek expert support: Do not hesitate to consult a tax lawyer or tax advisor from the claim stage onwards. An expert will know how to identify strong arguments and discard those likely to fail. Moreover, it signals to the administration that you are taking the matter seriously. Expert advice can also help assess the strategic dimension of the case. Indeed, the cost-benefit ratio of proceedings should be evaluated: are the legal costs and time invested justified by the expected gain? Litigation strategy must be weighed against the financial stakes of the adjustment, your chances of success, and even the potential impact on your company’s image. A professional can help you make the best decision, including the option of a settlement with the tax authorities if appropriate.
Conclusion
In summary, challenging an ACD tax adjustment is a demanding process, but entirely feasible for a determined and well-prepared entrepreneur. By strictly observing deadlines (three months for the claim, three months to seize the Administrative Court), assembling a well-argued and well-documented case, and seeking professional assistance where necessary, you significantly increase your chances of a favorable outcome. Luxembourg tax litigation, while technical, provides taxpayers with safeguards to defend their rights. Our tax litigation expert encourages you not to give up in the face of an adjustment you consider unjustified: with method and perseverance, your rights can be upheld and the dispute resolved fairly. Defending your interests ultimately means understanding the procedure and using the legal tools at your disposal—while respecting the rules of the game set by Luxembourg law. Your proactivity and rigor will be your strongest assets in achieving a satisfactory resolution in this type of case.
