Corporate Tax Plans for Luxembourg

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The Luxembourg Government has unveiled details of its corporate tax plans, designed to ensure that the Grand Duchy's tax regime remains attractive for investors.

During a recent parliamentary debate on competitiveness, the Government underlined the need to preserve Luxembourg's reputation as an international financial center that is welcoming to international investors, particularly in the area of corporate taxation.

To this end, the Government firmly ruled out the idea of increasing business tax, in order to maintain a stable business climate, favorable to the creation of jobs, and therefore to growth and to generating appropriate levels of fiscal revenues, flowing from income tax and from the indirect tax on the production of goods and services.

Underlining its proactive approach, the Government explained that it is constantly reflecting on Luxembourg's future economy and on its taxation, in particular the taxation of intellectual property and the digital economy. The Government is considering the idea of modifying the current tax treatment of intellectual property, for example, it said. The Government also revealed plans to improve the tax environment for innovative companies, particularly as regards the initial capital required by start-up companies.

Alluding to Luxembourg's large dependence on sectors with high added value, which often require a highly-skilled workforce, notably in the launch phase, the Government announced plans to adapt the Tax Administration's circular pertaining to the taxation of highly-qualified workers. The Government aims to guarantee a competitive and attractive tax regime for experts that come to Luxembourg for a limited period to strengthen Luxembourg's savoir-faire, it noted.

Finally, the Government confirmed plans to further modernize and simplify tax procedures for companies, ensuring a high level of computerization in the country's tax administration.

The Government also emphasized its intention to take keen note of the latest developments at international level in the area of taxation, and to listen attentively to financial center economic actors, to make sure that it adopts a proactive and reactive approach in the area of taxation at all times.