Luxembourg 2017 tax reform update regarding liberal professionals (directors, lawyers, notaries, architects, doctors, and other similar regulated activities)
Circular L.G. - A n° 63 from “Administration des Contributions Directes”, dated 15 September 2017, (hereafter “the Circular”), states the evolution of your accounting requirements, modifying the computation of your taxable profit.
Until 31 December 2016, your taxable profit could still be computed according to single-entry bookkeeping using cash basis accounting (difference between revenues and expenses) (circular LIR n°30 dated 15 May 1970).
As from 1 January 2017, should your annual net turnover exceed €100,000 you are required by the tax authorities to keep your accounting records using the double-entry bookkeeping method on an accrual basis2. Every transaction affects two different accounts: one debit and one credit, irrespective as to when revenues and expenses were respectively cashed in or paid out.
It is important to note that the Circular grants to independent workers and those falling under the paragraph 161 AO a delay until the new provisions must be applied. It also invites tax offices to ensure that this new rule is respected by the first financial year opened after 31 December 2017, at the latest.
KPMG Luxembourg can accompany you in this transition from an accounting and tax point of view. We can analyse your current situation and identify changes that will bring you into compliance with this new regulation. We can also help you implement these changes or even keep your accounts according to the double-entry method if you wish to outsource your accounting.
Tel.: +352 22 51 51 6374
1. The article 91 LITL provides the list of the professional activities that fall under the fiscal qualification of the benefit of the exercise of an independent profession.
2. Article 7 of the Law dated 23 December 2016 on the application of the tax reform, Memorial A n°274 dated 27 December 2016
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