February 2016 | Luxembourg Tax Update
During 2017, several changes in the Luxembourg Tax Law are expected to be in order with the EU rules and OECD decisions.
CIT of 15% | A gradual reduction of the corporate income tax (CIT) to 15% is planned. If the municipal business tax (MBT) and rate of the solidarity surcharge remain unchanged, the new income tax rate for corporations would be 22.80%.
Net Wealth Tax Reduction
✓Assets exceeding €500 million will be applicable to 0,05% Net Wealth Tax.
✓Assets below €500 million still will be applicable to 0,5%, this remains unchanged.
Minimum CIT will be replaced by minimum NWT
✓ Companies with a total balance sheet higher than €30.000.000 and a sum of fixed financial assets, transferable securities and cash at bank below 90% of the total balance sheet, will be applicable to €32.100 NWT.
✓ For the minimum CIT, assets which are exempt from NWT by application of a tax treaty are excluded from the balance sheet when computing the total balance sheet and the percentage of certain financial assets.
✓ The minimum NWT is reduced by an amount equal to the CIT.
✓ Securitisation vehicles, SIVARs, SEPCAVs and ASSEPs having a corporate form are liable to NWT.
New Provisions of the Parent-Subsidiary Regime
✓ Dividends and other profit distributions paid by qualifying subsidiaries to their Luxembourg parent company will no longer be tax exempt to the extent that such distributions are deductible a the level of the subsidiary.
✓ An anti-abuse rule has been introduced. Luxembourg will not grand the benefit of the Parent-Subsidiary Directive to arrangement(s) that have been put in place to obtain tax advantages instead of commercial reasons.
No IP Regime as of July 1, 2016
✓ The IP regime that provided exemption from CIT and MBT of 80% of net income and 100% exemption of NWT of the IP will be abolished be July 1, 2016. A grandfathering for IP rights developed or acquired before July 1, 2016 will be introduced. These IP rights will continue to benefit from the existing IP regime until June 30, 2021.
✓ As of 2016, each member of the tax unity is fully liable for CIT and MBT.
Maritime Investment Tax Credit
✓ The Government agreed to enlarge the scope of the investment tax credit (+/-14% of the acquisition price of eligible assets) to lessors for vessels used in international traffic.