Luxembourg Tax alerts
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New corporate filing formalities for LNIN effective 12 November 2024
18 October 2024
Starting 12 November 2024, all Luxembourg Trade and Companies Register (RCS)-registered entities and individuals must provide the Luxembourg National Identification Number for any natural person listed in their file.
German court rules on tax refunds for foreign investment funds
06 September 2024
For several years, foreign investment funds faced significant barriers in their attempts to obtain refunds of WHT paid on German dividend income, as their claims were consistently blocked by the German tax authorities. In the two decisions, the BFH ruled that the application of withholding tax to foreign investment funds (in these cases, a Luxembourg SICAV and a French FCP, while exempting domestic funds, violated the principle of free movement of capital under Article 63 of the Treaty on the Functioning of the European Union (TFEU).
Luxembourg to decrease tax burden for corporates and individuals to attract and retain talents
22 July 2024
Luxembourg Finance Minister Gilles Roth presented on 17 July 2024 a new draft law (n° 8414) aiming to strengthen the purchasing power of citizens, revive the economy, and promote inclusive and sustainable growth by proposing various tax reliefs in accordance with the proposed tax measures foreseen by the 2023-2028 coalition agreement and issued in November 2023 (see previous alert).
Chamber of Deputies publishes draft legislation amending Pillar Two law
26 June 2024
On 12 June 2024, the Luxembourg Chamber of Deputies published draft legislation amending the Law of 22 December 2023 implementing the EU Council Directive 2022/2523 on ensuring a global minimum level of taxation (15%) for multinational enterprise (MNE) groups and large-scale domestic groups within the EU. The draft legislation aims to integrate clarifications and additional technical provisions resulting from the OECD administrative guidance of 2023. The modifications proposed are intended to be effective as from fiscal years commencing on or after 31 December 2023.
Relance du marché immobilier résidentiel: Les nouvelles mesures fiscales et non fiscales
04 June 2024
Les tensions persistent sur le marché de l’immobilier résidentiel au Luxembourg suite aux facteurs structurels et conjoncturels. Le niveau toujours élevé des taux d’intérêts sur le long terme continue d’affecter de manière significative la capacité d’emprunt des ménages. Les demandes pour la location se substituent de plus en plus aux demandes d’achat. Cela se traduit par une baisse significative du nombre de nouveaux projets immobiliers, faute de demande, mais aussi par un recul important du nombre de transactions sur le marché de l’existant et une hausse des loyers découlant de la hausse de la demande. Le secteur de la construction de logements en vente en l’état futur d’achèvement (VEFA) est particulièrement impacté. Face à ce constat, le Gouvernement a acté une première série de mesures fiscales et non fiscales dans le but de renforcer les secteurs concernés ainsi que soutenir la demande et l’accès au logement. Ces mesures concrétisent une partie des promesses de l’accord de coalition 2023 – 2028.
Pillar Two in Luxembourg: a game changer for accountants
29 May 2024
The assessment and adoption of the Pillar Two law necessitate the understanding of taxation principles and consolidated financial statements requirements, further emphasizing the effects of accounting on taxation. It also brings attention to the crucial role that accountants may have when working along with tax specialists. Therefore, cultivating new tax accounting awareness and skills is becoming critical for a smooth adoption of the new Pillar Two accounting impacts.
Pillar Two Law - Enhanced clarification on tax disclosure requirements
03 April 2024
The Luxembourg law implementing the minimum effective tax rate (ETR) of 15% for multinational enterprises (MNEs) and large-scale domestic groups (DGs) with consolidated annual revenue exceeding EUR 750 million (referred to as the “Pillar Two law”) was published in the Official Journal on 22 December 2023. Effective for fiscal years commencing on or after 31 December 2023, any group falling within the scope of the Pillar Two rules must prepare to apply these new regulations. This process starts with the inclusion of relevant disclosures in annual financial statements, according to the transition rules outlined in the Pillar Two law.
Pillar Two Law - The positive vote of the Parliament marks a key milestone
21 December 2023
On 20 December 2023, the Luxembourg parliament adopted the law implementing EU Council Directive 2022/2523 of 14 December 2022, which establishes a global minimum taxation level (15%) for multinational enterprise (MNE) groups and large-scale domestic groups within the EU (“the Pillar Two law”). The law will be applicable for fiscal years commencing on or after 31 December 2023.
Tax credits will benefit companies investing in digital and green transformation
21 December 2023
On 19 December 2023, the Luxembourg Chamber of Deputies adopted a law to modernize the current investment tax credit; it will take effect 1 January 2024. The passed law was amended during the legislative process to address the oppositions posed by the Council of State.
Now that the law has been adopted by the Parliament, the legislative process will continue until the law is published in the official journal, which should take place before the end of the year. However, this should not impact how the new measures will be applied from 1 January 2024 onward.
Pillar Two draft law— Revised draft legislation released
24 November 2023
On 13 November 2023, the Luxembourg government submitted to the Luxembourg parliament proposed amendments to the draft law (“the draft”) published on 4 August 2023 for the implementation of EU Council Directive 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation (15%) for multinational enterprise (MNE) groups and large-scale domestic groups (“domestic groups” or “DGs”) within the EU (“Pillar Two directive” or “Pillar Two”). Those amendments transpose some of the administrative guidelines issued in February and July 2023 by the OECD that had not yet been included in the initial draft.
23 November 2023
The Luxembourg Constitutional Court ruled in a decision issued on 10 November 2023 (case n° 185, in French only) that part of the minimum net wealth tax regime, applicable to collective entities, is contrary to the constitutional principle of equal treatment because the threshold of EUR 350,000 does not have a rational basis.
Government coalition agreement 2023 - 2028: Proposed tax measures
22 November 2023
Following legislative elections in October 2023, the new Luxembourg government officially issued the text of its 2023-2028 coalition agreement on 20 November, setting out, among others, the tax measures envisaged for the next five years. These measures must be included in draft legislation and be submitted to and approved by parliament before they can become law.
Proposals include tax rate reductions for companies and individuals.
18 October 2023
Effective 1 January 2025, foreign investors in Germany will no longer need to provide physical vouchers. This follows the publication of the German Withholding Tax Relief Modernization Act (Abzugsteuerentlastungsmodernisierungsgesetz or “AbzStEntModG”) on 9 June 2021.
Pillar Two draft law—Phase four: Administrative compliance obligations
10 October 2023
On 4 August 2023, the Luxembourg government submitted to the Luxembourg parliament the draft law (“the draft”) for the implementation of Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation (15%) for multinational enterprise (MNE) groups and large-scale domestic groups (DGs) within the EU (“Pillar Two directive”). The draft still needs to complete the legislative process but must be implemented by 31 December 2023 to comply with the EU deadline.
This article covers the final phase of the Pillar Two analysis, with a primary emphasis on the administrative compliance obligations that must be fulfilled by an MNE group or DG within the scope of Pillar Two. It also provides further clarification on the computation of the top-up tax and on transitional rules.
Pillar Two draft law—Phase three: Diving into the effective tax rate computation
28 September 2023
On 4 August 2023, the Luxembourg government submitted to the Luxembourg parliament the draft law (“the draft”) for the implementation of Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation (15%) for multinational enterprise (MNE) groups and large-scale domestic groups (DGs) within the EU (“Pillar Two directive”). The draft still needs to complete the legislative process but must be implemented by 31 December 2023 to comply with the EU deadline.
According to the draft, when an MNE group or DG is within the scope of the Pillar Two rules (as discussed in our phase one article), an additional amount of tax (top-up tax) would have to be paid in relation to each jurisdiction in which the effective tax rate (ETR) is below the agreed 15% minimum level of taxation.
Pillar Two draft law—Phase two: Demystification of the top-up tax
19 September 2023
On 4 August 2023, the Luxembourg government submitted to the Luxembourg parliament the draft law (“the draft”) for the implementation of Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation (15%) for multinational enterprise (MNE) groups and large-scale domestic groups (DGs) within the EU (“Pillar Two directive”). The draft still needs to complete the legislative process but must be implemented by 31 December 2023 to comply with the EU deadline.
Pillar Two draft law—Phase one: To be or not to be in scope of Pillar Two
7 September 2023
On 4 August 2023, the Luxembourg government submitted to the Luxembourg parliament the draft law (“the draft”) for implementation of EU Council Directive 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation (15%) for multinational enterprise (MNE) groups and large-scale domestic groups (“domestic groups”) within the EU (“Pillar Two directive” or “Pillar Two”).
Accounting is not taking any holiday!
25 August 2023
On 28 July 2023, the Bill of Law no. 8286 (hereafter “New Law”) was introduced, addressing topics related to accounting, annual financial statements, consolidated financial statements (and related reports of undertakings), and the abolition of the “commissaire” function.
Luxembourg publishes draft Pillar Two legislation
9 August 2023
On 4 August 2023, the Luxembourg Chamber of Deputies published draft legislation implementing the EU Pillar Two directive.
Draft legislation to modernize current investment tax credit published
18 July 2023
The Luxembourg government presented to parliament a draft law on 13 July 2023 that proposes an in-depth modernization of the current investment tax credit.
Austria: New criteria to determine beneficial ownership
20 April 2023
The Austrian Federal Ministry of Finance (BMF) decided on 15 November 2022 (Geschäftszahl: 2022-0.816.735) to use the day before the Annual General Meeting of companies, during which the dividend was resolved (AGM date -1 day), as the new criteria for determining beneficial ownership.Up until 14 November 2022, the criteria used was the ex-date -1 day.
Germany and Switzerland welcome the digital filing of tax reclaims from 1 December 2023
23 January 2023
On 19 December 2022, Germany and Switzerland signed an agreement which implies that, from 1 December 2023, the submission of Withholding Tax Reclaims in Germany for Swiss residents will exclusively be in an electronic format.Enhanced clarification on tax disclosure requirements
