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11 January 2016

Luxembourg tax updates for 2016

Tax modifications affecting companies

The Luxembourg parliament has recently approved a number of tax modifications affecting companies.

For example, under amendments to the Parent-Subsidiaries Directive dividend payments made to Luxembourg parent entities from eligible subsidiaries located in other member states will not be exempt under the participation exemption regime in cases where they already qualify for a deduction in that member state.

It is also worth noting that the participation exemption will be of no value in cases where arrangements are considered an abuse of law, while other amendments lay down further anti-abuse rules.

Another important change for 2016 is the abolition of minimum corporate income tax. This will be replaced by a Net Wealth Tax, which will be determined by the value of a company's total assets as follows:

  • 0.5% on total net assets up to EUR 500 million

  • 0.05% on total net assets of EUR 500 million or more

In addition, on 1st July 2016 Luxembourg's intellectual property regime for corporate income tax /municipal business tax purposes will be abolished, with parliament expected to announce details of the new regime soon.

 

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