Luxembourg Tax Alert 2020-02

Luxembourg Tax Alert 2020-02



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You can read more about KPMG’s response to Covid-19 here.


Covid-19 update: state of emergency declared in Luxembourg

On 17 March 2020, Prime Minister Xavier Bettel announced that Luxembourg would soon be in a “state of emergency”, in accordance with article 32, paragraph 4. of the Luxembourg Constitution. This article foresees that, in the case of a crisis, the government can pass any legislative text or Grand Ducal decree necessary without seeking Parliament’s approval. Any measures taken must be in relation to the management of the Covid-19 outbreak.

Prime Minister Xavier Bettel has officially confirmed the state of emergency today, including several exceptional measures.

Specific tax measures in the context of Covid-19 were also announced on 17 March 2020.


Direct taxes

Companies and self-employed individuals that realize income from either a liberal profession, commercial, or agricultural activities can request help if they are facing liquidity issues due to Covid-19. Eligible taxpayers can file a request for:

  1. The cancellation (annulation) of Q1 and Q2 advance payments for both (corporate) income tax and municipal business tax. You can find the cancellation request form here (PDF, 647KB).
  2. A 4-month extension to the deadline for the payment of (corporate) income, municipal business and net wealth taxes due after 29 February 2020, without any penalty for late payment. You can access the deadline extension request form here (PDF, 670KB).


The tax authorities will automatically approve all eligible requests.

Furthermore, the authorities have extended the deadline to file both corporate and personal income tax returns (meaning by any individual taxpayer, in addition to the individuals mentioned above) to 30 June 2020.

Please also refer to our blog for the latest developments in relation to remote working and cross-border workers.


What does it mean for VAT?

We expect to see the government pass measures to support enterprises, artists and freelancers very quickly. Among the soon-to-be released measures, the Luxembourg VAT authorities may extend the deadlines for submission of VAT returns and payment extensions. VAT credits below EUR10,000 should be reimbursed as from this week. Until new measures have been passed, the Luxembourg VAT authorities’ have asked companies to communicate with them electronically, in so far as is possible.

More information should be made available in the coming days.

Embedding resilience

To help you understand your business exposure to Covid-19, and position your company for resilience in the face of this and the next global threat, we have made available the following resources to support you. 

© 2021 KPMG Luxembourg, Société coopérative, a Luxembourg entity and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

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