Upcoming Tax Changes

On 10 July 2015, the Government council adopted a bill containing various new tax measures (the “Bill”). The Bill itself has not yet been published but a press release has been published on the Government website.

The most important tax aspects of the Bill may be summarised as follows:

  • transposition into domestic law of Directive 2014/86/EU on anti-hybrid instruments and Directive 2015/121/EU on anti-abuse rules amending the parent subsidiary Directive 2011/96/EU (the “Directive”). In a nutshell, income from a participation will no longer be exempt in Luxembourg if such income is tax deductible in another EU Member State and the benefits of the Directive would no longer be granted if the transaction is deemed abusive based on the new wording of the Directive;
  • modification of the Luxembourg tax consolidation regime to allow sister companies to form a tax unity;
  • enlargement of the investment tax credit (“bonification d’impôt pour investissement”) to allow a lessor to benefit from this provision for ships used in international traffic; leasing of ships used in international traffic;
  • extension until December 2017 of tax credits for hiring unemployed persons; and
  • possibility to obtain a tax deferral upon transfer of a company or a permanent establishment outside Luxembourg to a third country having concluded an exchange of information agreement with Luxembourg that complies with the OECD principles. Currently, a deferral of payment is only open for transfers to the EU/EEA.