TAX CHANGES IN LUXEMBOURG
In December 2012, the Luxembourg Parliament approved the 2013 Budget and Tax Package which includes several tax changes connected to companies and individuals. Please find below the summary of the most important changes connected to Luxembourg companies.
Increase of the minimum tax of holding and finance companies
Companies that are subject to corporate income tax in Luxembourg and whose financial assets exceed 90% of their total assets have been subject to a minimum tax since 2011. The minimum tax shall be paid in advance. The amount of this tax was doubled from EUR 1,500 to EUR 3,000. Thus, the total charge is EUR 3,210 including the unemployment fund surcharge.
Introduction of a general minimum corporate income tax
A new minimum corporate income tax was introduced to all Luxembourg taxpayers other than the above mentioned holding and finance companies. The minimum tax ranges from EUR 500 to EUR 20,000 (without the contribution to the unemployment fund), within which there are six different tax amounts specified on the basis of the company’s balance sheet total. The highest amount is payable is the company’s balance sheet total exceeding EUR 20 million.
Further increase of taxes
Companies resident in Luxembourg are obliged to pay contribution to the unemployment fund. This contribution has been raised from 5% to 7%. This change resulted the increase of the total effective income tax rate from 28.8% to 29.22% for companies located in Luxembourg City. The total effective income tax rate is the ratio of the total tax payable and the total tax base. The total income tax rate consists the sum of the corporate income tax, municipal tax and unemployment fund surcharge.
Increase of the minimum tax of holding and finance companies
Companies that are subject to corporate income tax in Luxembourg and whose financial assets exceed 90% of their total assets have been subject to a minimum tax since 2011. The minimum tax shall be paid in advance. The amount of this tax was doubled from EUR 1,500 to EUR 3,000. Thus, the total charge is EUR 3,210 including the unemployment fund surcharge.
Introduction of a general minimum corporate income tax
A new minimum corporate income tax was introduced to all Luxembourg taxpayers other than the above mentioned holding and finance companies. The minimum tax ranges from EUR 500 to EUR 20,000 (without the contribution to the unemployment fund), within which there are six different tax amounts specified on the basis of the company’s balance sheet total. The highest amount is payable is the company’s balance sheet total exceeding EUR 20 million.
Further increase of taxes
Companies resident in Luxembourg are obliged to pay contribution to the unemployment fund. This contribution has been raised from 5% to 7%. This change resulted the increase of the total effective income tax rate from 28.8% to 29.22% for companies located in Luxembourg City. The total effective income tax rate is the ratio of the total tax payable and the total tax base. The total income tax rate consists the sum of the corporate income tax, municipal tax and unemployment fund surcharge.
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