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Luxembourg Tax alerts
Tax alert is issued on a regular basis highlighting the latest key tax developments in Luxembourg.
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.
Various proposals would affect Luxembourg employers of French cross-border workers
20 October 2022
During a working visit to Paris on 1 October 2022, Luxembourg’s Minister of Finance Yuriko Backes and France’s Minister of Finance Bruno Le Maire agreed on an amendment to the France-Luxembourg tax treaty that would increase the workdays tax tolerance threshold for cross-border workers from 29 to 34 days as from 1 January 2023.
2023 budget law submitted to parliament
14 October 2022
On 12 October 2022, Luxembourg’s finance minister presented the draft 2023 budget law to parliament, including direct and indirect tax measures.
Cross-border workers: Luxembourg guidance clarifies “days worked” tolerance threshold
9 September 2022
The Luxembourg tax authorities published on 26 August 2022 some important clarifications on how to apply the threshold of days worked in Luxembourg for cross-border workers who are tax resident in Germany, Belgium, or France.
21 July 2022
On 14 July 2022, several deputies submitted a proposal to the Luxembourg Chamber of Deputies (n°8047) to boost investment in sustainable and digital entrepreneurship (hereafter “the Proposal”).
20 July 2022
The Italian Supreme Court (Italy’s highest tax court) has made positive decisions in seven cases involving a German investment fund and six US investment funds.
Proposal of super deduction for R&D, digital and ecological/environmental transition
14 July 2022
On 4 July 2022, the Chamber of Commerce submitted a proposal to the Minister of Finance allowing certain taxpayers to claim a super deduction of an additional 50% to 100% on their eligible costs for research and development (R&D), digital transformation and ecological and environmental transition.
New double taxation convention signed by Luxembourg and the United Kingdom
12 July 2022
On 7 June 2022, the governments of Luxembourg and the United Kingdom (UK) signed a new double taxation treaty (“new DTT”), which will replace the current agreement between both countries.
Cross-border workers: important update to post-COVID-19 measures from 1 July
1 July 2022
The exceptional COVID-19 measures put in place through various mutual agreements will not be renewed after 30 June 2022 and will, therefore, no longer apply from 1 July 2022.
29 March 2022
To mitigate the risk that these employees are taxed in their home state during this exceptional situation, amicable tax agreements were concluded between Luxembourg and Belgium, Germany and France.
16 March 2022
On 9 March 2022, the Luxembourg government released a new draft law amending the interest deduction limitation rules of article 168bis of the Luxembourg income tax law.
Filing formalism with the Luxembourg trade and companies register – new features as of 31 March 2022
21 February 2022
As of 31 March 2022, as part of the new registration filing formalism with the Luxembourg trade and companies register (the RCS), a Luxembourg national identification number (LNIN) for the registration of a natural person will need to be recorded.
New LTA Circular on real estate levy provides valuable update on reporting obligation
4 February 2022
On 20 January 2022, the Luxembourg tax authorities (LTA) released a new Circular (PRE_IMM n° 1 du 20 janvier 2022) regarding the real estate levy introduced by the Luxembourg law of 19 December 2020.
Update on personal income taxation and social security
18 January 2022
There is an administrative obligation to file, every year, an annual report that lists the individuals benefiting from this regime and confirms that they still meet the conditions.
Draft directive to implement global minimum tax: Variances from OECD model rules
11 January 2022
Further to the publication of the G20/OECD inclusive framework on BEPS’ Global Anti-Base Erosion Model Rules (Pillar Two) (“OECD inclusive framework model rules”) designed to ensure a global minimum level of taxation for multinational groups (by reference to a minimum effective tax rate of 15%), the European Commission (EU Commission) proposed on 22 December 2021 a draft directive to implement the OECD inclusive framework model rules in a coherent and consistent way across EU member states.
EU Commission proposes new own resources for EU budget
10 January 2022
On 22 December 2021, the European Commission (EU Commission) released a Communication on the next generation of own resources for the EU Budget.
EU Commission proposes directive to prevent misuse of shell entities in the EU
7 January 2022
On 22 December 2021, the European Commission released a draft for a new directive laying down rules to prevent the misuse of so-called “shell” entities for tax purposes in the EU and amending Directive 2011/16/EU on administrative cooperation in the field of taxation (DAC), referred to as the “Unshell initiative."
17 December 2021
Since the beginning of the COVID-19 crisis in March 2020, many Luxembourg non-resident cross-border employees have worked from their homes in Belgium, France, or Germany.
28 September 2021
Since the beginning of the COVID-19 crisis in March 2020, many Luxembourg non-resident cross-border employees have worked from their homes in Belgium, Germany or France.
LTA clarifies timing of first CBCR reporting year in case of demergers/acquisitions
27 August 2021
On 20 August 2021, the Luxembourg tax administration (LTA) clarified the timing of the first reporting year under country-by-country reporting rules (CBCR) in case of demergers/acquisitions and the use of the “NOTIN” code.
29 June 2021
Since the beginning of the COVID-19 crisis in March 2020, many Luxembourg non-resident cross-border employees have worked from their homes in Belgium, Germany or France.
Tax authorities update guidance on interest expense deduction limitation rules
8 June 2021
The Luxembourg tax authorities updated their guidance on the interest expense deduction limitation rules of article 168bis of the Income Tax Law (ITL) by commenting on the equity escape provision for members of a consolidated group for financial accounting purposes in a circular dated 2 June 2021 (Circular n°168bis/1, in French only).
LTA issues a new Mutual Agreement Procedure circular
17 March 2021
On 11 March 2021, the Luxembourg tax administration (LTA) issued a new circular regarding the implementation terms of the Mutual Agreement Procedure (MAP) under the bilateral tax treaties concluded by Luxembourg, and in line with article 25 of the OECD Model Tax Convention (or analogous tax convention stipulations).
11 March 2021
Personal income tax - Since the COVID-19 crisis began in March 2020, many Luxembourg non-resident cross-border employees have worked from their homes in Belgium, Germany or France.
Luxembourg tax authorities issue circular regarding the prime participative
16 February 2021
The Luxembourg tax authorities issued guidance regarding the new remuneration model, the prime participative (or profit-sharing bonus) on 11 February 2021 in a circular (circular L.I.R. n°115/12 dated 11 February 2021).
Deductions denied for amounts due to certain related parties as from 1 March 2021
29 January 2021
On 28 January 2021, the Luxembourg legislature adopted rules disallowing tax deductions for interest and royalties due to related entities established in a country or territory included in the EU list of non-cooperative jurisdictions for tax purposes (EU list). These rules will be effective as from 1 March 2021.
Tax authorities release guidance on interest limitation rules
13 January 2021
The Luxembourg tax authorities issued guidance clarifying certain aspects of the interest expense deduction limitation rules in article 168bis of the Income Tax Law.
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