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Luxembourg Tax News 2015-16

Luxembourg Tax News 2015-16



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Luxembourg - new proposed corporate tax rules

On 10 July 2015, the government’s council approved a bill containing various new tax measures which will have an impact on most multinational groups with subsidiaries in Luxembourg. Whilst the text of the bill is not yet available, the press release issued by the Luxembourg government indicated that the key measures included in the new bill are as follows:

  • Transposition of two recent amendments made to the EU Parent-Subsidiary Directive (the Directive) in July 2014 and January 2015, namely the anti-hybrid and general anti-abuse rules. Consequently, income from a participation falling within the scope of the Directive will no longer be exempt in Luxembourg if it is tax deductible in another EU Member State. In addition, the provisions of the Directive would no longer be granted if the transaction may be considered as abusive based on the new wording of the Directive;
  • Changes to the tax consolidation regime in order to allow eligible sister companies to form a tax unity group (so-called “horizontal” tax unity). This change is made in order to comply with EU law (and notably based on the recent ECJ decision of 12 June 2014, “SCA Holding”);
  • Enlargement of the scope of investment tax credit (“bonification d’impôt pour investissement”) in order to ensure that a lessor is entitled to benefit from this provision for ships used in international traffic;
  • Enlargement of the scope of taxpayers eligible for a deferral of payments for taxes due in case of transfer of a company or a permanent establishment outside of Luxembourg. Currently, the deferral of payment is only granted if the host country is located in the EEA, but this would now be extended to transfers made to any third country having concluded an exchange of information agreement with Luxembourg that complies with the OECD principles; and
  • Extension of the tax credit available for hiring unemployed persons until December 2017.

The bill must now be voted by the Luxembourg parliament. In parallel, the Luxembourg government is currently working on a comprehensive tax reform for 2017.

Most of the above provisions should further enhance the attractiveness of Luxembourg for international investors. Luxembourg corporate taxpayers should nevertheless assess the possible consequences of these new measures once the actual text of the bill is available.


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Any tax advice in this communication is not intended or written by KPMG to be used, and cannot be used, by a client or any other person or entity for the purpose of (i) avoiding penalties that may be imposed on any taxpayer or (ii) promoting, marketing, or recommending to another party any matters addressed herein.The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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