Luxembourg Implements New Tax Provisions

Luxembourg has implemented various measures with the aim of increasing revenue through taxation. Most of the provisions come into effect from January 1, 2013. The details of the important tax measures are summarized below:

For Corporate doing business in Luxembourg:
• The surcharge for employment fund has been hiked by two percentage points from 5% to 7%. This would result in an increase in the total tax for the City of Luxembourg, from 28.80% to 29.22%.

• A minimum tax for corporations has also been introduced. The tax will range from EUR 500 for small companies, to EUR 20,000 for companies with a balance sheet total of more than EUR 10 million. Companies with less than 50 employees and an annual turnover or total balance sheet value of less than EUR 10 million will qualify as small companies.

• Presently, for business organizations with financial assets (including transferable securities, receivables, and bank deposits) of more than nine-tenths of their total assets, a minimum tax of EUR 1,500 per year is levied.
For taxable Individuals in Luxembourg:

• A new tax base bracket has been introduced for individuals with a taxable income of EUR 100,000 or more and for married couples with a taxable income of EUR 200,000 or more. The rate of tax for this bracket will be 40%.
• The surcharge for the employment fund will be 7% (in general), an increase of 3%.

• There are new restrictions for lump-sum deductions of travel expenses.

• There is an annual cap on deductions for debit Interest on consumer loans.

Other Important Changes:
• There are amendments to the investment tax credit system and certain reductions have been offered.

• Certain aspects pertaining to taxation of stock options have been clarified.

• The system for the computation of the taxable base (corporate tax) will be revised.
 

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This release was published on openPR.