The Luxembourg government has announced a decrease of the income tax rate for companies whilst it also proposes inter alia an increase of the minimum net wealth tax and other tax measures for individuals.
"This move combines the objectives of competitiveness, fairness and budget balancing, as well as ensuring financial sustainability," said Ogier tax partner Caroline Bormans.
Important tax changes for companies proposed by the Luxembourg government to apply from 2017 include
- decrease of the corporate income tax rate from 21% to 19% (2017) and 18% (2018) resulting in aggregate tax rates for companies established in Luxembourg-City of 26.08% (2017) and 26.01% (2018) instead of 29.22% (i.e. including surcharge 7% and municipal business tax of 6.75%)
- increase of the minimum NWT to EUR 4,518 (EUR 4,500 + 7% solidarity surcharge)
- tax losses carry forward limited to 10 years and utilization only up to 80% of the taxable income for each taxable period
- abolition 0.24% registration duties on the registration of debt claims
Additional measures for individuals have also been proposed, such as an increased cap for deduction interest charges on mortgages and increased income tax on income above EUR 150,000. Withholding tax on savings income to resident Lux taxpayers has increased from 10% to 20% (RELIBI).
Please note that the above changes have only been proposed and are therefore not definitive.
Caroline added: "Other previously announced measures, such as the abolition of withholding tax on dividends, extension of the participation exemption and abolition of net wealth tax, have unfortunately not been included in these latest proposals. Also, it seems that the new IP regime will be introduced at a later stage."
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