On 14 February 2019, the Luxembourg Parliament adopted the law ratifying the OECD Multilateral Convention to implement tax treaty related measures to prevent BEPS, better known as the ‘multilateral instrument’ (MLI).
Further to the elections for Parliament held in October this year, the former ruling coalition between the liberal, ecological and socialist parties emerged victorious and the Prime Minister was appointed by the Grand Duke to form a new government.
On 20 March, 2018, France and Luxembourg signed a new Double Tax Treaty (“DTT”), which was released yesterday. The aim of the new DTT is to replace the existing one that was signed in 1958, and amended 4 times since then. The DTT follows the structure and, for the most part, the content of the 2017 OECD Model Tax Convention.
On 30 January 2018, the EU Commission issued a notice regarding the impact of Brexit in the field of customs and indirect taxation.
In its notice, the EU Commission calls for preparedness from EU stakeholders, and recalls that, unless an agreement would provide for another date, the United Kingdom will have to be treated as a non-EU country as from 30 March 2019.
The purpose of this update is to inform you of aspects of 2017 tax reform that entered into force as of 1 January 2017. Indeed, the Luxembourg law implementing such tax reform was published in the official gazette on 27 December 2016.
Since 1 January 2017, the overall corporate income tax rate of Luxembourg has been reduced from 29.22% to 27.08%. The new rate takes into account the corporate income tax (‘CIT’) as such (reduced to 19% instead of 21%), the solidarity surtax of 7% calculated on the CIT and the municipal business tax of 6.75% for the city of Luxembourg. It should be noted that this rate of 27.08% will be further reduced to 26.01% from 2018.
This Year End Tax Bulletin summarises the most significant 2016 tax developments in our home markets, the Benelux and Switzerland, and highlights the main legislative changes announced for 2017. It also provides an insight into major international and EU developments. The focus is on the developments and changes with relevance for internationally operating enterprises.
Situated at the crossroad of Europe, the Grand-Duchy of Luxembourg is based on a dynamic and open economy which actively promotes the development of cross border trade and investments. Its major role in matter of international trade in the sectors of banking and finance, investment funds and holding companies has for a consequence that a strong network of double tax treaties has been developed over the years
On 10 August 2016, the Luxembourg court of appeal overturned the decision of the Luxembourg lower administrative tribunal regarding the VAT treatment of fund investment management services supplied by a Luxembourg based asset manager to an Irish SICAV and entirely delegated to a US service provider. Arendt & Medernach's intervention for the asset manager concerned (i) the right of VAT deduction of the Luxembourg asset manager and by extension, (ii) the VAT exemption applicable on the delegated services.
