The Luxembourg government presented on 29 February the principles of the next fiscal reform to take effect on 1 January 2017.
The majority of the measures announced will impact individuals (e.g. adaptation of the tax rates per tranche of income, increase of ceilings for various tax deductions, increase of withholding tax on income from savings of Luxembourg individual resident,…), with a global positive effect in most cases. With respect to companies, the notable measures can be summarised as follows:
- decrease of the standard corporate income tax rate in two steps from 21% (year 2016) to 19% (year 2017) and then to 18% (year 2018), this tax rate does not take into account the surcharge for employment fund and the municipal business tax;
- decrease of the Luxembourg corporate income tax rate from 20% to 15% for companies with an annual taxable income below EUR 25,000 (which may be relevant in particular for start-up businesses);
- increase of the minimum annual net worth tax for SOPARFIs from EUR 3,210 to EUR 4,815; and
- limitations to the use of tax losses carried forward.
We will follow the developments in relation to this tax reform project closely and are of course available to discuss the topic with you.