Luxembourg tax reform 2023January 2023
Luxembourg government filed a draft bill proposing a 1% reduction of certain VAT for the period from 1 January 2023 to 31 December 2023.
This bill is part of the government's package of measures to mitigate the effects of energy and consumer prices on households and businesses.
Luxembourg U.K. Double Tax AgreementJune 2022
Luxembourg and the U.K. signed on June 7, 2022 a new double tax agreement, DTA, replacing the present DTA between the two countries.
According to the new DTA the withholding rate for payments of dividends will be tax exempt, depending on certain terms, whereas, the present rate is 5%.
For royalties paid only the state of residence of the recipient has the right to tax the payment, compared to the present 5% tax withholding rate.
Luxembourg Tax Filing ExtensionFebruary 2021
According to a draft law confirmed by the parliament individuals can file their 2019 reports in Luxembourg to March 31, 2021.
Regarding 2020 reports both corporate and individuals have an extension to file their annual reports to June 30, 2021.
Luxembourg V.A.T RiseJanuary 2015
Starting January 1, 2015 the new standard V.A.T rate is increased from 15% to 17%.
The reduced rate of 12% is increased to 14% and the reduced 6% rate is increased to 8%.
The 3% V.A.T rate remains unchanged.
Luxembourg Poland Double Tax TreatyAugust 2013
The double tax treaty of 2012 between the two countries entered into force on July 25, 2013.
According to the tax treaty the tax withholding rate for payments of dividends is 0%/15% depending inter-alia on the percentage of shareholding in the paying company.
The tax withholding rate for interest and royalties is 5%.
In general double tax treaties between two countries are boosting mutual investments between the countries offering reduced tax withholding rates from payments of dividends, interest and royalties.
The tax treaty often includes an exchange of tax information clause and definition of a permanent establishment for activities carried in the other country.
It also clarifies certain cross border tax issues.
E.g the treaty would define in what country tax is to be paid when a service supplier/consultant from country A provides services in country B.
In some treaties there is a tax credit under certain terms. e.g. an exemption to a consultant from country A of X dollars per each day of staying in country B in order to supply the taxable services.
Luxembourg VAT UpdateDecember 2012
Starting January 1, 2013 all transactions exceeding EUR 112,000 must be electronically filed to the VAT office. The obligation does not include SMEs.
In addition the registration threshold will increase from the current EUR 10,000 to EUR 25,000.
Luxembourg 2013 BudgetOctober 2012
Luxembourg 2013 budget which was presented on October 2, 2012 includes several tax amendments.
For individuals the employment fund surcharge will increase from 4% to 6%. The surcharge for companies will also increase from 5% to 7%.
A new minimum corporate income tax will be introduced ranging from EUR 500 to EUR 10,000.
Luxembourg Online V.A.T. ReturnsJanuary 2012
Starting January 1, 2013 all V.A.T. taxpayers in Luxembourg will have to file online their monthly/quarterly V.A.T. returns.
Luxembourg Russia New DTADecember 2011
Luxembourg and Russia signed on November 21 a new protocol amending the existing 1993 double tax treaty, DTA.
The protocol includes, inter-alia, a reduced 5% tax withholding rate instead of the present 10% rate from certain payments of dividends subject to terms.
The new DTA will enter into force after being ratified by both countries.
Luxembourg is off the Brazilian Grey ListApril 2011
Brazil's tax authorities removed on 28.3.2011 Luxembourg's holding companies from the Brazilian grey list of privileged tax regimes.
An inclusion in the grey list has implications regarding Brazilian thin capitalization and transfer pricing regulations.
Luxembourg UAE Double Taxation TreatyMay 2009
On April 29, 2009 the Luxembourg parliment finally ratified the double taxation tax treaty between Luxembourg and the UAE, The traety was pending since November 2005.
The treaty includes provisions regarding tax withholding rates for payments of dividends, interest and royalties, based mainly on the OECD model, taxation of capital gains between the two countries and exchange of tax information.
The treaty will be effective from 1.1.2010.
Luxembourg Corporate Tax ReductionMay 2008
Luxembourg's prime minister announced on 22 May 2008 that he will reduce Luxemburg's corporate tax rate from 29.63%, consisting of corporate tax and municipal tax, to 25.5%.
The reduction will be effective from 1.1.2009.
From 1.1.2009 the 0.5% capital duty will be abolished. Capital duty is imposed on contributions of capital to a company. Earlier in 2008 the capital duty was reduced from 1% to 0.5%.
The proposed changes are expected to increase Luxembourg's attractiveness to foreign investors.
Note: The information in this site is for general guidance only. Users of this site are advised to take professional advice before taking practical tax decisions.
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