COVID-19: Overview of Luxembourg supporting measures

The Covid-19 outbreak has been declared a public health emergency of international concern by the World Health Organization, causing unprecedented impact on people's lives, businesses and communities.

On 17 March 2020, the Luxembourg government has declared a three-month duration of state of emergency for Luxembourg in accordance with article 32, paragraph 4. of the Luxembourg Constitution.

This article states that a state of emergency can be declared “in the event of an international crisis, real threats to the vital interests of all or part of the population or imminent danger resulting from serious breaches of public security.”

As a consequence, the government can pass any legislative measures through Grand Ducal regulation or decree – without seeking the Parliament’s approval- and impose measures that can deviate from existing laws, though the Constitution also states that “they must be necessary, adequate and proportionate to the purpose being pursued” and must also comply with the Constitution and international treaties.

Any measures taken must therefore be in relation to the management of the crisis resulting from the Covid-19 outbreak.

A series of measures have already been taken by the Luxembourg government to alleviate the financing and liquidity needs of companies and self-employed persons, to mitigate the impact of the COVID-19 pandemic on their businesses and to ease continuity of the businesses.

To help entities subject to its supervision navigate through the COVID-19 crisis, the Commission de Surveillance du Secteur Financier (the CSSF) also issues communications and recommendations on a regular basis. A COVID-19 FAQ combining updated CSSF guidance is available on the CSSF website: CSSF FAQ_COVID-19. Main topics covered thereunder are further detailed below.

The Benelux Office for Intellectual Property (BOIP) has also implemented various measures to accommodate for inevitable disruptions caused by the outbreak.

1. Tax relief measures

1. Cancellation of tax advances

Companies and individuals who exercise a commercial activity, an agricultural activity or a liberal profession, and who experience liquidity problems as a result of the coronavirus can request the cancellation of their quarterly advances of income tax (impôt sur le revenu) and/or municipal business tax (impôt commercial communal) for the 1st and/or 2nd quarter of 2020.

For income tax purposes, this means that taxpayers can request (i) repayment of the advance that was due on 10 March and (ii) cancellation of the advance that is due on 10 June
As regards municipal business tax purposes, taxpayers are allowed to request (i) repayment of the advance that was due on 10 February and (ii) cancellation of the advance that is due on 10 May.

Taxpayer that would like to request a cancellation of their tax advances have to complete a dedicated form (https://impotsdirects.public.lu/dam-assets/fr/formulaires/covid/annulationavances.pdf) and send it to their responsible tax office by either post or email. Taxpayers have to indicate in the form a brief justification for the cancellation of the tax advances. However, requests for cancellation of tax advances should automatically be accepted by the Luxembourg tax authorities.

Instead of cancelling the tax advances, it is also possible for taxpayers to request a reduction of the amount of tax advances due for the 1st and/or 2nd quarter of 2020. Taxpayers can request for a deduction of said tax advances by sending a motivated letter to their tax office.

Advances for net wealth tax (impôt sur la fortune) are not covered by this measure. As a result, net wealth tax advances that are due by taxpayers on 10 February, 10 May, 10 August and 10 November remain normally due.

1.2. Deferral of tax due

Companies and individuals who exercise a commercial activity, an agricultural activity or a liberal profession, and who experience liquidity problems as a result of the coronavirus can request a deferral of tax that they are due. The relevant taxes for which deferral can be requested concern income tax, municipal business tax and net wealth tax.

Taxpayer that would like to request a deferral of their tax due have to complete a dedicated form (https://impotsdirects.public.lu/dam-assets/fr/formulaires/covid/delaipaiement.pdf) and send it to their responsible tax office by either post or email. Taxpayers have to indicate in the form a brief justification for the cancellation of the tax advances. However, requests for deferral of tax due should automatically be accepted by the Luxembourg tax authorities.

The deferral amounts to 4 months and commences on the payment deadline that is indicated in the tax assessment. Deferral can only be requested for tax whose payment deadline is after 29 February. No late payment interest will be due if taxpayers pay the tax within the 4-month deferral period.

1.3. Extension of deadline for submitting tax returns

The deadline for submitting tax returns has been extended from 31 March (individuals) or 31 May (companies) to 30 June 2020.

The extension also applies to married taxpayers wishing to request, modify or revoke their choice of individual taxation.

1.4. VAT

The Ministry of Finance has announced that the Luxembourg tax authorities will reimburse all VAT credit balances below € 10,000.

In addition, the Luxembourg tax authorities will not administratively sanction the late filing of VAT returns. This tolerance applies until otherwise indicated by the Luxembourg tax authorities.

1.5. Teleworking computation days for French and Belgian cross-border commuters

Luxembourg has reached an agreement with France and Belgium on taxation of cross-border workers.

Cross border workers that are employed in Luxembourg are taxed on their employment income in Luxembourg provided that the employment is physically exercised there. If not, they are in principle taxed in their country of residency on said employment income.

Luxembourg has agreed with Germany, Belgium and France that Luxembourg will preserve the right to tax income from employment if the cross-border worker exercises its employment for a maximum number of days (Homeworking Limits) outside Luxembourg (i.e. 19 days for Germany, 24 days with respect to Belgium and 29 days as regards France).

Due to the coronavirus, many cross-border workers are currently forced to work from home. As a result, it is likely that the Homeworking Limits will be exceeded this year so that cross-border workers from Germany, Belgium and France will be partly taxed on their employment income in their country of residence. In order to prevent this, Luxembourg has agreed with Belgium and France that from 14 March 2020 until further notice, the number of days that cross-border workers work from home do not count as days for purposes of the Homeworking Limits.

It is expected that Luxembourg will agree the same with Germany in the coming days.

2. Social security relief measures

As regards social security, the Luxembourg Social Security Centre (Centre Commun de la Sécurité Sociale or CCSS) has taken the following temporary measures in light of the coronavirus which will apply as from 1 April:

  • Suspension of the calculation of default interest for late payments;
  • Suspension of the procedure for forced collection of contributions;
  • Suspension of the execution of restraints by way of a bailiff; and
  • Suspension of fines imposed on employers for late reporting with the CCSS.

For the moment, it is not required to ask for an extension of the payment deadline. The CCSS will inform companies and persons concerned as soon as these measures come to an end.

The aforementioned measures apply not only to future social security contributions, but also to the current balances of social contributions, despite any mention (interest, payment terms, etc.) on the CCSS account statement dated 14 March 2020.

In addition to these measures, the CCSS will proceed with the payment of an advance on the financial compensation of the leave for extraordinary family reasons granted to parents of children under 13 years. This measure aims to advance a substantial part of the reimbursement of wages that employers must continue to pay to the parents. The advance will be paid in mid-April. 

3. Other financial supporting measures for companies

On 16 March 2020, a draft law providing for a special aid regime for small and medium-sized enterprises in temporary financial difficulties because of an unforeseeable and unique event of national or international dimension was lodged with Parliament.

On 17 March 2020, the Council of Government adopted several amendments to the draft law in order to extend its scope to large enterprises and liberal professions.

The aid is subject to three cumulative conditions:

  • an unforeseeable event officially recognised by the Council of Government as having a detrimental impact on the economic activity of certain enterprises during a given period; and
  • the entreprise faces temporary financial problems; and
  • there is a casual link between these difficulties and the unforeseeable event at stake.

The aid is to be granted under the form of a recoverable advance payment. The aid can amount up 50% of the admissible expenses without exceeding EUR 200,000 per company and EUR 500,000 per group of companies.

Admissible expenses for calculating the amount of the aid are limited to the loss of income that must be established after a comparative analysis between the result realized during the three previous tax years and the forecast result of the months following the unforeseeable event. The revised draft law further considers as eligible costs the company's staff costs and rental charges, the latter being capped at EUR 10,000 per month per single company. The text assimilates to personnel costs, income from the exercise of a professional activity carried out as a self-employed person on condition that the person is affiliated as such with the provisions of the Social Security code, these costs being capped at an amount equivalent to 2.5 times the minimum social wage.

The repayment of the aid will not begin until 12 months at the earliest after the first payment of the recoverable advance.

The draft law complements existing aid schemes such as short-time work.

4. Corporate governance faciliting measures

Due to the outbreak of COVID-19, the travel and quarantine restrictions may obviously impact the corporate governance of Luxembourg companies. Practical difficulties in organizing meetings of corporate bodies can compromise the fulfilment of legal obligations, compliance with legal deadlines and prevent the companies from obtaining corporate approvals necessary to carry on their normal business.

4.1. Holding of meetings

In response to these challenges, the Grand-Ducal Regulation of 20 March 2020 introducing measures concerning the holding of meetings in companies and other legal entities (the Regulation) allows to adapt the decision making process to the current extraordinary circumstances in the following manner:

Shareholders meetings:

Regardless of (i) any contrary provisions or lack of provisions in their articles of association and (ii) the number of participants to the meetings, companies are allowed to hold general meetings of shareholders in virtual-only form, without a physical meeting. In this respect, the shareholders may attend the meetings and exercise their rights:

  • By voting remotely in writing or by electronic means, provided that the resolutions or decisions to be taken have been published or sent to them in advance;
  • Through a proxy holder designated by the company; or
  • By video conference or any other means of communication allowing shareholders’ identification.

The above applies also to meetings of bondholders.

Board meetings (including boards of directors, board of managers and supervisory boards’ meetings):

  • By written circular resolutions; or
  • By video conference or any other means of communication allowing board members’ identification.

Participation by such means to shareholders and other corporate bodies’ meetings, is deemed presence for the purpose of quorum and majority requirements calculation. It is worth noting that, even in case of companies that already authorised in their articles of association the adoption of board’s decisions in writing, this measure adds additional flexibility, by extending this form of decision making to majority vote decisions (and not only to unanimous vote decisions, as is otherwise the case under the standard rules of the Luxembourg company law).

Regulation further eases the legal deadlines for holding annual general meetings and deals with procedure to be followed for already convened meetings:

The companies are allowed to call their annual general meetings on the later of the following two dates:

  • The date falling six months after the end of its financial year; and
  • A date within a period ending on 30 June 2020

Companies which already sent out a convening notice and now wish to proceed by way of vitual-only meetings as further described above are under the obligation to publish such decision and to notify their shareholders in the same form as the meeting was originally convened or by publication on their website no later than three business days before the said meeting.

4.2. Extension of the deadline to file the 2019 annual accounts

Companies will have an additional administrative period of 4 months to make their 2019 financial data filings at the Luxembourg Trade and Companies Register, at the standard rate of € 19 excl. VAT (excluding registration fees and the CNC tax). The surcharge for late filing of financial data is exceptionally suspended, until 30/11/2020 for filing delays of up to 4 months included. Thus, for a financial year ending, for example, on 31/12/2019, the filing of annual accounts will be subject, until 30/11/2020, to the standard administrative costs of € 19 excluding VAT.

4.3. Notarial appointments

Notary offices remain generally open, however any visits thereto are limited in line with the emergency measures taken by the government. Information requests and exchanges are made electronically, by preference through e-mail, fax or by phone.

4.4. Legalisation and apostille

The Passport, Visa and Legalisation Office which handles legalisation and apostille matters for Luxembourg documents remains also open during limited hours for urgent certification requests.      

5. Regulatory guidance

In light of the situation entailed by COVID-19, the CSSF has issued a series of press releases destined to entities subject to its supervision.

5.1. AML online survey extension of deadline

From an anti-money laundering and fight against terrorist financing perspective, the CSSF has granted professionals an additional delay to complete the CSSF survey, i.e. by 10 April 2020.

5.2. Organisational set-ups

The CSSF has dispensed relevant professionals from seeking a prior authorisation from the CSSF for the implementation of measures enabling their employees to work by way of distance. In this respect, the CSSF has issued several recommendations regarding measures to be taken by professionals in order to ensure that remote access does not expose such professionals to notably IT security risks. On 21 March 2020, the CSSF has urged regulated entities to review their organisational set-ups in order to enable their employees to work remotely from home. Working from the business or backup sites of such entities should be limited to vital functions which cannot be performed remotely.

5.3. Recording of telephone conversations

ESMA has clarified, by way of a public statement, that in these exceptional circumstances, entities may be confronted to situations where the mandatory recording of telephone conversations, as set out under MiFIDI II, may not be practicable. In such case, entities should consider other measures to mitigate risks deriving from the lack of recording. Such measures should, however, remain temporary and the recording of telephone conversations restored as soon as possible.

5.4. Reporting deadlines maintained

On 23 March 2020, the CSSF has specified that supervised entities are required to comply with their regulatory reporting requirements when they are due. Duly justified delays may be accepted by the CSSF provided the latter has been informed of foreseen difficulties as soon as possible and ahead of reporting deadlines.

5.5. Communication channels

Communications with the CSSF should be made either by way of the CSSF’s eDesk portal or by email (in addition to or replacement of postal mail). The CSSF remains available for meetings either by way of teleconference or videoconference.

5. Benelux Office for Intellectual Property extension of deadlines

Due to the current situation, the BOIP has also decided the following:

From 16 March 2020 until such time as it is reasonably possible for IP professionals and entrepreneurs in the Benelux countries to work normally again, BOIP will not withdraw any requests or procedures because a given deadline has not been met. This also applies to opposition proceedings not submitted on time or payments not received on time.
BOIP will determine when it is reasonable for IP professionals and other entrepreneurs in the Benelux countries to be able to work normally again. BOIP will set a date (BAU date) for this in due course and communicate it.
An additional period of one month will be given for all requests and procedures for which current deadlines have expired between 16 March 2020 and BAU date, or for which deadlines are less than one month on BAU date. This month will be counted from BAU date.
As a result of the above provisions, the BOIP register may not reflect the accurate status of certain trademarks.