In his traditional annual speech at Parliament, the Prime Minister, Mr. Jean-Claude Juncker, announced recently various tax measures aimed at maintaining and improving the tax attractiveness of Luxembourg.
The tax measures for companies include:
• The abolition of the 0,5% capital duty as from 2009
This is probably the most expected tax measure. It follows the reduction of the capital duty from 1% to 0,5% in 2008. The complete abolition of the capital duty in Luxembourg had been announced by the Government at the time of the reduction to 0,5% but had become uncertain following Council Directive 2008/7/EC of February 12 2008 as the Directive does no longer oblige EU Member States to abolish capital duty within a certain timeframe.
• Decrease in corporate tax rates
A decrease of the global income taxation of companies (Corporate Income Tax and Municipal Business Tax) from 29,63% to 25,5%. This will however occur in 2 steps and will probably, where appropriate and possible, says Juncker, be accompanied by some measures that will aim at enlarging the taxable basis of companies.
Regarding the taxation of individuals, the main measures are as follows:
• Tax brackets adapted to inflation
It is the intention to further adapt the tax brackets to inflation. The tax brackets will be increased by 6%, which implies a reduction of the overall tax burden.
• Limits of deduction will be increased
Several tax deductions will be increased, including tax deductions for insurance costs
• New tax bonus for wage earners
The tax deduction available to wage earners of 600 Euro (compensatory abatement for wage earners) will be replaced by a 300 Euro tax bonus. This is a special benefit to those paying no or little income tax and therefore could not in the past benefit from tax reductions.(...)
The tax measures for companies include:
• The abolition of the 0,5% capital duty as from 2009
This is probably the most expected tax measure. It follows the reduction of the capital duty from 1% to 0,5% in 2008. The complete abolition of the capital duty in Luxembourg had been announced by the Government at the time of the reduction to 0,5% but had become uncertain following Council Directive 2008/7/EC of February 12 2008 as the Directive does no longer oblige EU Member States to abolish capital duty within a certain timeframe.
• Decrease in corporate tax rates
A decrease of the global income taxation of companies (Corporate Income Tax and Municipal Business Tax) from 29,63% to 25,5%. This will however occur in 2 steps and will probably, where appropriate and possible, says Juncker, be accompanied by some measures that will aim at enlarging the taxable basis of companies.
Regarding the taxation of individuals, the main measures are as follows:
• Tax brackets adapted to inflation
It is the intention to further adapt the tax brackets to inflation. The tax brackets will be increased by 6%, which implies a reduction of the overall tax burden.
• Limits of deduction will be increased
Several tax deductions will be increased, including tax deductions for insurance costs
• New tax bonus for wage earners
The tax deduction available to wage earners of 600 Euro (compensatory abatement for wage earners) will be replaced by a 300 Euro tax bonus. This is a special benefit to those paying no or little income tax and therefore could not in the past benefit from tax reductions.(...)
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