Highlights

 

 

RECENT Tax news AND UPDATES

 

IMPLEMENTATION IN LUXEMBOURG OF THE UBOs' OFFICIAL REGISTER

 

LUXEMBOURG CHAMBER OF REPRESENTATIVES ENACTED BILL N. 6929 RELATING TO RESERVED ALTERNATIVE INVESTMENT FUNDS  (R.A.I.F.)

 

TAX BENEFITS DERIVING FROM THE LUXEMBOURG INTELLECTUAL PROPERTY TAX REGIME WILL SOON BE CONSIDERABLY REDUCED UNDER THE SO CALLED ‘MODIFIED NEXUS APPROACH

 

A NEW SIMPLIFIED PRIVATE LIMITED LIABILITY COMPANY IN LUXEMBOURG, A S.À.R.L.-S

 

BEARER SHARES HAVE COME TO AN END IN LUXEMBOURG.

 

LUXEMBOURG AND USA HAVE FINALLY SIGNED THE FATCA AGREEMENT.

 

AUTOMATIC EXCHANGE OF INFORMATION IS A NEW STANDARD AMONG OECD COUNTRIES.

Tax News

Tax updates:

Implementation in Luxembourg of the UBOs' Official Register

  • Luxembourg is implementing the Register of Beneficial Owners as the act of 13 January 2019 has just been published in the Official Journal on 15 January 2019.

  • It will enter into force on 1st March 2019 and the main provisions of the Act can be summarised as follows.

    • obligations apply to all entities registered with the Luxembourg trade and companies register pursuant to article 1, points 2 to 15 of the law of 19 December 2002 on the trade and companies register and the accounting and annual accounts of undertakings, as amended. It will therefore apply to commercial companies with legal personality such as, amongst others, sociétés anonymes (public limited liability companies) and sociétés à responsabilité limitée (private limited liability companies), other legal entities such as, amongst others, sociétés en commandite spéciale (special limited partnerships) as well as investment funds in the form of a fonds commun de placement (mutual funds) (together, the Affected Entities). The Act also imposes obligations upon the beneficial owners themselves.

    • The legal representatives of the Affected Entities must:

      (i) obtain and hold information on the beneficial ownership of the Affected Entity including their first names, last name, nationalities, date and place of birth, country of residence, address, identification number, and the nature and extent of the beneficial interests held (as well as relevant supporting documentation). That information must be accurate and up to date at all times;

      (ii) file the above information as well as supporting evidence with the Luxembourg Business Registers acting as manager of the register of beneficial owners known as the Registre des bénéficiaires effectifs (the RBE). By derogation, listed companies whose securities are admitted to trading on a regulated market must only file the name of the relevant regulated market. The list of documents to be provided as supporting evidence and how to electronically file will be determined in a grand ducal regulation which is not yet available.

      In addition to these initial steps, the legal representatives will then have to:

      (i) update such filing within one month upon becoming aware of any event that would make such information inaccurate or obsolete;

      (ii) upon simple request, within three days, provide access to all information listed above on their beneficial owners to the national authorities (amongst others the State prosecutor, the investigating judges, the financial intelligence unit, the Commission de surveillance du secteur financier (the financial sector regulator), the Commissariat aux assurances (the insurance regulator) as well as the tax authorities);

      (iii) upon duly justified request, within three days, provide the first names, last name, nationalities, date and place of birth, country of residence of their beneficial owners, and the nature and extent of the beneficial interests they each hold to certain professionals as defined in the Act (e.g. credit institutions, lawyers, notaries etc.) in connection with the performance of customer due diligence measures; and

      (iv) indicate the place where the above information will be kept for five years after the Affected Entity has been removed from the Luxembourg trade and companies register.

      In parallel, the beneficial owners of an Affected Entity themselves must provide all necessary information about them (as listed under 2. (i) above) to that Affected Entity.

      The information that national authorities or certain professionals can request from the Affected Entities are also accessible to them in the RBE.

    • Any person, whether or not residing in Luxembourg, may request access to the following information held in the RBE: the first names, last name, nationalities, full date and place of birth, country of residence and the nature and extent of the beneficial interests held by the beneficial owners of an Affected Entity. To get access to that information, neither a legitimate interest nor a prior authorisation by a competent organ is required. National authorities have unrestricted access to all information listed under 2. (i) above for their missions.

      In exceptional circumstances, where granting access would expose the beneficial owner to a disproportionate risk, a risk of fraud, kidnapping, blackmail, violence or intimidation, or where the beneficial owner is a minor or otherwise incapable, an Affected Entity or a beneficial owner may request an exemption whereby the access will be restricted to the national authorities, credit and financial institutions, public notaries and bailiffs only for as long as the circumstances so justify and up to three years (exemption which can be renewed upon duly motivated request).

    • The Act provides for criminal fines ranging from EUR 1,250 to EUR 1,250,000 against the Affected Entities if they fail to obtain, hold and provide, when required by law, information on the beneficial owners or, if they have voluntarily provided inaccurate, incomplete or obsolete information on their beneficial owners.

      Failure by a beneficial owner to provide the necessary information may also trigger a criminal fine ranging from EUR1,250 to EUR1,250,000.

    • The Act provides for a 6 months transition period after its entry into force. Affected Entities and their beneficial owners must therefore comply with the provisions of the Act before 1st September 2019.

Would RAIFs be able to project Luxembourg as the most competitive market in the world’s fund industry sector?

  • Luxembourg Parliament just enacted Bill n. 6929 implementing in Luxembourg the R.A.I.F. – Reserved Alternative Investment Fund – regime which will, to a large extent, replicate the regime applicable to the specialized investment fund (SIF) with the big difference of not being subject to the supervision by the Luxembourg authority C.S.S.F.
     
  • Even though we are yet expecting circulars and explicative notes from Luxembourg Authorities we may nevertheless be able to provide you with some highlights on such a regime.
     
  • R.A.I.F. regime is being reserved for the structuring of AIFs that appoint a duly authorized AIFM.
     
  • The adoption of the Alternative Investment Fund Managers Directive (AIFMD) has created a shift in European regulatory focus as it is a management regulation which aims at ensuring adequate supervision (and regulation) of fund managers (AIFMs), rather than the funds themselves. The AIFMD marketing passport is available to all funds which are managed by an authorized AIFM, irrespective of whether the funds are supervised or not.
     
  • In Luxembourg, the management supervision introduced by the AIFMD has come as an additional layer of supervision on top of the existing Luxembourg product supervision and it seems to many a bit excessive.
     
  • The new law will aim at providing other structuring solutions to managers setting up AIFs that want to avoid the double layer of regulation. 
     
  • In fact, the RAIF will be reserved for the structuring of funds that appoint a duly authorized AIFM, irrespective of whether such AIFM is established in Luxembourg or in any other EU Member State. 
     
  • The RAIF will be subject to a regime similar to that applicable to SIFs, except that it will not be subject to the supervision of the CSSF.
     
  • upon adoption of the Bill, it will therefore be possible to launch a RAIF without the need to obtain any prior (or ex-post) regulatory approval. This is, however, without prejudice to any requirements which may apply to the AIFM under the AIFM Directive.
     
  • the RAIF regime will be strictly reserved for AIFs that appoint a duly authorized AIFM (in Luxembourg or in any other EU Member State) as their external AIFM and are therefore subject to the full AIFMD requirements.
     
  • It will be possible to establish a RAIF either as: (i) a common fund (fonds commun de placement, FCP), (ii) as an investment company with variable capital (société d’investissement à capital variable, SICAV) or fixed capital (société d’investissement à capital fixe, SICAF) in the form of:
    • a public limited liability company (société anonyme, SA);
    • a corporate partnership limited by shares (société en commandite par actions, SCA);
    • private limited liability company (société à responsabilité limitée, Sàrl); or
    • SCS or an SCSps.
  • RAIFs will avail of the umbrella structure, enabling them to launch from time to time ring-fenced sub-funds (also referred to as compartments), each sub-fund corresponding to a distinct part of the assets and liabilities of the RAIF. Each sub-fund can display specific features set out in the RAIF’s issue document. In particular:
    • each sub-fund can have its own investment policy;
    • the rules governing the issue and redemption of securities/interests can be tailored to each specific sub-fund. For instance, it is possible to combine within the same umbrella:
      • open-ended and closed-ended sub-funds; and/or
      • fully-funded sub-funds and sub-funds with a drawdown capital structure; and/or
      • (for SICAV/F-RAIFs structured as an SCS/SCSp) sub-funds issuing securitized partnership interests and sub-funds using partnership accounts.
  • the rules governing the terms of each sub-fund may be freely determined in the RAIF’s issuing document. The liquidation of a sub-fund does not trigger the liquidation of other sub-funds or of the RAIF as a whole (unless there are no other active sub-funds at the time). 
     
  • a different investment manager or investment adviser can be appointed for each sub-fund. Similarly, each sub-fund can have its own investment committee or advisory board. However, the managing body (eg, the board of directors for an SA, the general partner for an SCA, SCS/SCSp or the management company for an FCP), the depositary, the central administration agent, the statutory auditor and the AIFM, must be one and the same at the level of the RAIF as a whole.
     
  • each sub-fund can have its own fee structure and distribution or carried-interest structure.
     
  • each sub-fund can be reserved for one or several investors or categories of investors.
     
  • Cross-investments between sub-funds of the same umbrella RAIF will be permitted, subject to certain conditions (which are identical to those applicable to SIFs). Further, a RAIF (or a sub-fund thereof) may have two or more classes of securities whose assets are invested in common but which are, for instance, subject to different fee structures, distribution policies, marketing targets or edging policies or denominated in different currencies. The ability for a non-regulated fund to adopt the umbrella structure will be a revolution in Luxembourg.
     
  • SICAV-RAIFs established as an SA, an SCA or an Sàrl will be subject to flexible corporate rules:
    • there will be no legal constraints on the rules applying to the issue and redemption of shares (including those applying to the issue price) which will have to be determined in the articles of association (subject to the requirement that at least 5% of each share be paid up on issue);
    • they will be subject to a minimum capital requirement of EUR 1,250,000 to be reached within 12 months of their incorporation. The subscribed capital, increased by the amount of share premium, will be taken into account for the purposes of this requirement;
    • the payment of (interim and annual) dividends will not be subject to any legal restriction (other than compliance at all times with the minimum capital requirement); and they will not have to create a statutory reserve.
  • RAIFs will have to comply with the risk-spreading principle, unless they invest exclusively in risk capital and have opted for the special tax regime.
     
  • RAIFs will be subject to a dual tax regime:

a) General tax regime: RAIFs will, in principle (that is, unless they opt for the special tax referred to under item (b) below), be subject to the same tax regime as SIFs. Under this general tax regime, RAIFs will be exempt from corporate income tax or other taxes in Luxembourg, except for a subscription tax (taxe d’abonnement) levied on their net assets at a rate of 0.01% p.a. (subject to certain exemptions). This subscription tax will also apply to RAIFs established as an SCS or an SCSp (unless they opt for the special tax regime referred to under item (b) below);

b) Optional tax regime for RAIFs investing only in risk capital: RAIFs (other than those under the form of an FCP) investing in risk capital will be entitled to opt for a special tax regime, which will be identical to that applicable to SICARs, and would therefore not be subject to the subscription tax. 
RAIFs incorporated under the form of an SA, an SCA or an Sàrl that opt for this special tax regime will be fully taxable (which should allow them to access double taxation treaties) but will be in a position to exempt from their tax base all income and capital gains derived from securities (valeurs mobilières). Income generated by cash pending investments in risk capital will also be exempted, provided this cash is effectively invested in risk capital within a period of maximum 12 months. RAIFs opting for the special tax regime will further be exempt from net wealth tax, except for a minimum net wealth tax applied to all fully taxable Luxembourg companies as from 1 January 2016 (in general, the amount of the minimum net wealth tax would be EUR 3,210 p.a. for RAIFs holding mostly fixed financial assets, securities and cash).

 

 

 

 

 

 

 

 

  1. Recent News on Luxembourg IP tax regime:
  • The current Intellectual Property (IP) rights regime provides that 80% of the income and gains derived from qualifying IP (copyrights on software, patents, trademarks, designs, models and domain names) are exempt from CIT and municipal business tax (MBT). In addition, qualifying IP rights are exempt from NWT.
  • There are currently some comments in Luxembourg regarding the future Luxembourg IP Tax Regime (Bill of law n. 6900) and, as the parliamentary approval process is on-going, the latter may still propose amendments to the Bill before its final approval.
  • The Luxembourg Bill N° 6900, as previously said, includes a proposal to repeal the Luxembourg IP Box Regime (as currently stated in Article 50bis of the Luxembourg Income Tax Law and § 60bis of the Luxembourg Evaluation Law or “Bewertungsgesetz”) but with a five-year grandfathering period.
  • The proposed repeal of the IP Box Regime is in line with the OECD recommendations on action 5 of the base erosion and profit shifting (“BEPS”) action plan final report as released in October 2015, notably, the so-called “Modified Nexus Approach for IP Regimes” which allows a taxpayer to benefit from an IP Box Regime in line with the expenditures, such as research and development expenses (“R&D”), linked to generating the IP income, and only in the country where the related R&D is conducted.
  • The implementation of the amended Nexus Approach will most likely result in a considerable standardization of the IP Box Regimes in ALL EU member states, which most probably will envisage the elimination of trademarks as eligible IP rights. 
  • The Bill N° 6900 proposes to repeal the Luxembourg IP Box Regime as from July 1st, 2016 for corporate income tax and as from January 1st, 2017 for net wealth tax purposes.
  • In accordance with the provisions stated in the BEPS final report addressing action 5, a five-year grandfathering period starting as from July 1st, 2016 and ending on June 30th, 2021 is foreseen to apply to:
  • existing Luxembourg IP Box Regimes; and
  • IP rights acquired, constituted, or modified/improved before July 1st, 2016 (under certain conditions, please see below).
  • It is nevertheless noted that the Bill provides for anti-abuse rules to restrict the benefit of the transitional period and ensure strengthened transparency vis-à-vis foreign tax authorities.
  •  In this respect, the contemplated measures are twofold:
    • a reduction of the grandfathering period to December 31st, 2016 (January 1st, 2018 for net wealth tax) for IP rights acquired from related parties, unless the concerned IP rights were eligible to the existing IP Box Regime; and
    • a spontaneous exchange of information concerning existing IP Box Regimes in connection with IP rights acquired or created after February 6th, 2015. The Luxembourg tax authorities will in this respect have to disclose the identity of the taxpayer benefitting from the Luxembourg IP Box Regime to the competent tax authorities of the concerned foreign country at the earlier of
      • three months from when the information is made available to them, or
      • one year following the filing by the taxpayer of its annual tax return.
  • It is worthwhile to highlight that the Bill N° 6900 does not provide for a new Luxembourg IP Box Regime compliant with the OECD guidance on BEPS and the Nexus approach. However, since there are strong indications that other states are currently willing to introduce a BEPS compliant IP Box Regime (e.g. Germany, Ireland and the US), or to amend their IP Box Regime (e.g. UK), a new Luxembourg IP Regime is expected and would hopefully be released within the coming months (details regarding the new regime are currently not yet available and will be included in a separate bill).
  • Conditions for the benefiting from the five-year grandfathering period starting as from July 1st, 2016 and ending on June 30th, 2021, as follows:
  • the IP rights are developed or acquired from unrelated parties before 1 July 2016 or are improved before that date;
  • the IP rights are acquired from any related parties (as stated in Article 56 of the Luxembourg income tax law) before 31 December 2015;
  • the IP rights are acquired after 31 December 2015 but before 1 July 2016 and they were acquired from any related party which benefitted already from the old Luxembourg IP regime or from a corresponding foreign IP regime at the time of their acquisition. This condition also applies to rights acquired under a tax neutral transaction. Finally, for IP rights acquired or created after 6 February 2015, the Luxembourg tax authorities would have to spontaneously communicate the information about the taxpayers benefitting from the old IP regime to the concerned foreign tax authorities.

 

  1. Possible reduction of NWT
  • Currently Luxembourg taxpayers are subject to net wealth tax at the rate of 0.5% on their net wealth determined as at January 1st based on the annual commercial accounts of the preceding year.
  • Under the Bill N° 6891 it is proposed to amend § 8 of the net wealth tax law (dated 16 October 1934, as further amended or Vermögenssteuergesetz hereinafter “VStG”) to introduce a reduced rate of 0.05% that will apply to net wealth in excess of 500 million so that the net wealth tax due will be equal to EUR 2.5 million increased by 0.05% of the portion of the net wealth tax base above EUR 500 million.
  • It is foreseen that the reduced net wealth tax rate will apply as from January 1st, 2016.

 

  1. Possible amendments to the current Luxembourg corporations’ minimum tax

-     The Luxembourg Bill law n. 6891 also foresees to replace the existing minimum corporate income tax regime (as laid down under Article 174 paragraph 6 of the Luxembourg Income Tax Law, in effect as of January 1st, 2011) by introducing a minimum net wealth tax regime.

  • This proposal to abrogate the minimum corporate income tax follows a European Commissions’ notice communicated to Luxembourg in September 2014 analyzing the Luxembourg minimum taxation regime in light of the EU Parent Subsidiary Directive 2011/96/EU (the “Directive”). The European Commission is of the view that the Luxembourg minimum taxation regime may contravene the Directives’ principle of non-­ double taxation avoidance of group revenues and should be amended.
  • Under the current minimum corporate income tax regime Luxembourg taxpayers, holding financing assets representing at least 90% of their total assets, are subject to a fixed minimum corporate income tax of EUR 3,210 (including the solidarity surcharge).
  • All other taxpayers are liable to a minimum corporate income tax that is progressive and linked to their total balance sheet, in a range of EUR 535 (including solidarity surcharge) for taxpayers with a balance sheet not exceeding EUR 350,000, up to EUR 21,400. The minimum corporate income tax is an advance payment that becomes final only if no corporate income tax is incurred in the following years.
  • The proposed minimum net wealth tax regime is intended to abrogate the corporate minimum taxation regime as from January 1st, 2016.
  • In fact, based on the Bill N° 6891, a fixed net wealth tax of EUR 3,210 for all fully resident corporate taxpayers holding fixed financial assets, receivables on related entities, transferable securities and cash at bank exceeding 90% of their balance sheet in a given year and in an amount of EUR 350,000.
  • For all other corporate taxpayers (i.e. in essence, companies that do not qualify as pure holding and financing companies) the minimum net wealth tax will be progressive, as follows:

Total Balance sheet of the company

Minimum Net Wealth Tax

Up to EUR 350,000

EUR 535

From EUR 350,001 up to EUR 2,000,000

EUR 1,605

From EUR 2,000,001 up to EUR 10,000,000

EUR 5,350

From EUR 10,000,001 up to EUR 15,000,000

EUR 10,700

From EUR15,000,001 up to EUR 20,000,000

EUR 16,050

From EUR 20,000,001 up to EUR 30,000,000

EUR 21,400

As from EUR 30,000,000

EUR 32,100

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Tax benefits deriving from the Luxembourg intellectual property tax regime will soon be considerably reduced under the so called ‘modified nexus approach’.

In November 2014 Germany and United Kingdom jointly submitted to OECD a proposal which had its focus on the so called modified nexus approach. Such a new approach would apply to all EU existing favorable intellectual properties tax regimes as the one we currently have in Luxembourg.

The mentioned proposal was accepted by the OECD members who released a specific document, the OECD/G20 BEPS Project - Action 5: Agreement on Modified Nexus Approach for IP Regimes.

The provisions contained in the OECD/G20 BEPS Project - Action 5: Agreement on Modified Nexus Approach for IP Regimes are the following ones:

  • nexus approach substantially would mean that income derived from eligible intellectual property rights may benefit from a favorable tax treatment in proportion of the research and development expenditures incurred by the taxpayer in relation to the said intellectual property rights. Additionally, under certain circumstances, an up-lift of the eligible expenditures might be increased by 30%;
  • definition of qualifying intellectual property rights will be amended in order to include patents, and equivalent assets. Trademarks should be kicked out;
  • existing EU intellectual property tax regimes will be over as soon as the nexus approach will be introduced in any of the EU countries;
  • in any event, any existing EU intellectual property tax regime (like the one we have in Luxembourg) will be over after 30 June 2016.

In that light, the Luxembourg Minister of Finance Pierre Gramegna confirmed that the Luxembourg intellectual property tax regime will soon be amended aligning it with the modified nexus approach. The Luxembourg Parliament should begin in year 2015 the legislative process aiming at adapting the art. 50-bis LIR (ruling the current Luxembourg intellectual property tax regime) to the new international OECD standards.

Therefore, Luxembourg existing intellectual property tax regime will be refused to new entrants as from 30 June 2016 but, simultaneously, a Luxembourg grandfathering clause will allow all taxpayers benefiting from the current intellectual property tax regime to keep such benefits until 30 June 2021 (still for good 6 years).

OECD should release further new guidelines which will allow us to understand better how such nexus approach should be applied practically.

Finally, Luxembourg companies currently managing intellectual property should definitively make sure to file an updated advanced tax ruling at the Luxembourg tax authorities, at least, to be able to have the certainty to keep their current tax advantages until 30 June 2021. 

 

A new simplified Private Limited Liability Company in Luxembourg, a S.à.r.l.-s

The final S stays for simplified and, effectively, the New Luxembourg Private Limited Liability Company may be indeed so. We say 'may' because the Bill n. 6777 of 02/02/2015 has not yet been converted in Luxembourg Law.

The Simplified S.à r.l. may have the following features:

  • no need of Notarial deed, a private deed would be sufficient;
  • possibility to inject a share capital from € 1 to € 12,394;
  • restrictions are:
    • physical shareholders only,
    • physical Directors only
    • obligation to allocate each year 1/20th of the net profits in a non-distributable reserve;
    • corporate object limited to the industrial, commercial and craftsman-activities (activities or professions for which a business license is required, as well as some other liberal professions).

 

Bearer shares have come to an end in Luxembourg

 

Last summer, Luxembourg has implemented a new law (the Law, entered into force on August 18, 2014, has been published on the Luxembourg Mémorial A, Recueil de Législation, on August 14, 2014) which envisages the crystallization of bearer shares.

Such a law is now in line with the recommendations of the Financial Action Task Force (FATF) and the Global Forum on Transparency and Exchange of Information for Tax Purposes relating to the identification of holders of bearer shares and units.

The mentioned law applies to Sociétés Anonyms – S.A. –, Sociétés en Commandite par Actions – S.C.A. – and to all investment vehicles that have issued or are about to issue bearer shares or units (i.e. SICAV, SICAR, SIF, etc.) and implies that such companies need to deposit the bearer shares / units before a Luxembourg depositary that shall keep a register of the bearer shares or units containing the necessary information in order to be able to identify the share/units holders.

The law specifically implies an:

 

-           automatic suspension of voting and financial rights attached to bearer shares or units in case such a deposit were not made within 6 months from the entering in force of the mentioned law;

-           automatic cancellation and relative reduction of share capital for bearer shares or units which are not deposited within 18 months from the entering into force of the Law.

 

Luxembourg and USA have finally signed the FATCA Agreement

 

Luxembourg Minister of Finance and the U.S. Ambassador to Luxembourg finally signed the Foreign Account Tax Compliance Act – FATCA – on March 28, 2014 which implements the automatic exchange of information between the two mentioned countries and which relates to all kind of assets kept by US citizens / residents with Luxembourg banks.

 

Automatic exchange of information is a new standard among OECD countries

 

Automatic exchange of financial information has become a standard among the OECD countries and, substantially is very similar to FATCA as reporting financial institutions will automatically exchange information on reportable and financial account information, using common reporting and due diligence procedures.


Implementation of the Alternative Investments Fund Managers Directive into Luxembourg law gives Luxembourg partnerships new challenges

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2013 'tax news'

Such new tax measures include the following:

  • the minimum corporate income tax for all tax resident SO.PAR.FI.s has increased from € 1,500 to € 3,000 (€ 3,210 considering the 7% solidarity surcharge) for which the total sum of fixed financial assets, transferrable securities and cash deposited in bank accounts exceeds 90% their total gross assets (receivables due by affiliated companies need to be taken into account for the purposes of such a calculation);



  • introduction of a minimum corporate income tax for non-SO.PAR.FI.s ranging from € 500 to € 20,000 depending on corporations’ gross assets held in their accounts at the end of their fiscal year (net value of assets which, applying the double tax treaty, result to be exclusively taxed in the other jurisdiction is not taken into account when determining the total gross assets of the Luxembourg corporations), as depicted below:



Total Balance Sheet

Minimum CIT due

Minimum CIT due taking into account the solidarity surcharge

≤ EUR 350,000

EUR 500

EUR 535

≤ EUR 2,000,000

EUR 1,500

EUR 1,605

≤ EUR 10,000,000

EUR 5,000

EUR 5,350

≤ EUR 15,000,000

EUR 10,000

EUR 10,700

≤ EUR 20,000,000

EUR 15,000

EUR 16,050

> EUR 20,000,001

EUR 20,000

EUR 21,400

 

  • as suggested by the Luxembourg Council of State and in compliance with EU directives and double tax treaties, the minimum corporate income tax has to be considered as an advance tax payment of any present or future CIT that will be due by the corporation. Such an advance tax payment will not be reimbursed to the taxpayer;



  • in case group companies are included into a tax consolidation, the minimum CIT due by the parent company will be summed up to the minimum CIT due by each of the companies included in the tax consolidation, but only up to the maximum amount of € 20,000;



  • in application of the aforementioned tax measures, the creation of a NWT reserve may reduce the corporations NWT liability, but to the extent the minimum CIT is due (in fact the minimum tax cannot be compensated by a corresponding reduction of the NWT due by the corporations);



  • the solidarity contribution applied to the amount of income tax due is increased by 3% for individuals and 2% for corporations:

- corporations’ contributions have increased from 5 to 7% bringing the global income tax rate from 28.80 % to 29.22% (Luxembourg city);

- individuals’ contributions have increased from 4 to 7% for taxable incomes not above € 150,000 (€ 300,000 for tax class 2) bringing their marginal income tax rate to 42.80%;

- individuals’ contributions have increased from 6 to 9% for taxable incomes above € 150,000 (€ 300,000 for tax class 2) reaching a marginal income tax rate of 43.60%;

 

  • as far as the taxation of individuals is concerned:

- a new marginal tax rate of 40% will be applied for individuals incomes which are above € 100,000;

- the maximum tax deduction of interest charges on consumer loans is decreased to € 336;

- abolition of ‘frais de déplacement’ amounting to € 396.