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Luxembourg: Tax developments in response to COVID-19

General Information

This page offers an overview of tax developments being reported globally by KPMG member firms in response to the Novel Coronavirus (COVID-19).

The content will be updated regularly. However, due to the fast-moving pace of change, it may not always reflect the most current developments in a given jurisdiction. Please refer to the date of accuracy and refer to the relevant links, under additional information, for original source information.

Date accurate as of: 20 May 2020

Direct taxes

  • Companies and self-employed individuals that realize income from a profession, or commercial or agricultural activities can request help if they are facing liquidity issues due to COVID-19. Eligible taxpayers can file a request for:
    • cancellation (annulation) of the first and second quarterly advance payments for both (corporate) income tax and municipal business tax for 2020; and
    • a four-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. The tax authorities will automatically approve all eligible requests.
  • The authorities have extended the deadline to file both corporate and individual (personal) income tax returns to 30 June 2020. 
  • The deadlines for lodging administrative appeals against tax assessments are suspended from 18 March until 30 June 2020. Deadlines for judicial claims expiring during the state of crisis will be postponed by two months from the end of the state of crisis. Deadlines for judicial claims expiring in the month following the end of the state of crisis will be postponed by one month from their expiry date.

Additional Information

VAT

  • The government is expected to 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.
  • The Luxembourg value added tax (VAT) authorities on 12 May 2020 announced the end of an “administrative tolerance” for late submissions of VAT returns—that is, relief allowed in response to the coronavirus (COVID-19) pandemic.
  • Accordingly, all pending VAT returns not yet submitted because of the pandemic—in particular January and February 2020 monthly VAT returns—need to be filed as soon as possible to avoid potential penalties. No specific provisions regarding a transitional period or progressive measures are foreseen.

Additional Information

Remote working and cross-border workers: 

  • The number of days that cross-border employees can work from home without being taxed by their home country are found in the Double Tax Treaties and is limited. 
  • However, the Belgian and Luxembourg governments have announced that, in the case of a “force majeure” like Coronavirus, working from home days will not count towards the 24-day threshold.
  • Where a neighboring country goes into quarantine, their resident’s leave will not be taxed in the home country. 
  • The days that Belgian, French and German residents work from home due to COVID-19 will not count towards the 24-day tax threshold for the Belgians, the 29-day threshold for the French or the 19-day threshold for the Germans. The days will be taxed in Luxembourg.
  • It has been confirmed that working at home in another country will not affect your social security status: those covered by the Luxembourg system will still be covered regardless of number of days worked at home during the outbreak.
  • French, Belgian, and German cross-border workers require a certificate, signed by their employer, to cross the Luxembourg border.

Board meetings

By special Grand Ducal decree (dated March 20, 2020), the Luxembourg authorities have formally decided that shareholders meetings and board meetings can be held by video conference or through other means (circular resolutions for board meetings, votes in writing or special proxies for shareholders meeting).

Additional Information