Luxembourg: Year-end provisions enacted, affecting corporate and individual taxpayers

Year-end tax provisions in Luxembourg

The Luxembourg Parliament in December 2015 approved tax measures affecting both corporate and individual taxpayers. These provisions generally are effective beginning 2016, with a few measures applying retroactively as from 2015.

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Among the measures in the tax legislation are the following provisions:

  • Transposition of amendments to the EU Parent-Subsidiary Directive with the introduction of a general anti-abuse rule and an anti-hybrid rule into the Luxembourg domestic participation exemption regime 
  • Enlargement of the scope of the fiscal (tax) unity regime, extended to tax groups formed by "sister companies" without their parent company being part of the tax unity, thus introducing the concept of “horizontal” fiscal unity
  • Changes to the minimum corporate income tax and withholding tax rules
  • Repeal of the intellectual property regime (as recommended by the OECD in the BEPS Action 5 report)
  • Introduction of a temporary tax amnesty regime
  • Other tax measures including expanded scope of the investment tax credit and of application of the exit tax deferral measures, and a step-up basis mechanism for individuals becoming Luxembourg residents and an option to be taxed in Luxembourg for the entire calendar year for individuals being Luxembourg residents for only part of the year

 

Read a December 2015 report [PDF 158 KB] prepared by the KPMG member firm in Luxembourg

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