In light of the economic difficulties caused by Covid-19, the Budget Law 2021 focuses on tax measures limited in scope rather than on a tax reform. Included within the Budget Law are also a few tax measures for individual taxpayers.
Xavier Martinez: The new individual tax measures for 2021 are:
- The participation premium, which is, provided some conditions are met, 50% tax exempt. The amount to be distributed, which is deductible from a corporate tax standpoint, is limited to both 5 % of the employer’s operational profits of the previous year and to 25 % of the employee’s base remuneration of the year of payment
- Simplification of the impatriate tax regime, which can be now applied to companies having less than 20 employees, and extension from 4 to 8 years following the start of the activity in Luxembourg
- Gradual switch to digitalized tax cards as from 2022: employers will have to access a platform created by the Luxembourg authorities to manage the tax cards
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What’s new for individual taxpayers?