Law & Numbers - News Tax


16.10.2008 (Luxembourg)

Tax changes to be implemented in 2009 according to 2 Bills introduced by the Luxembourg government before the Parliament

(A) Direct taxes (Bill of 1 October 2008)

- Decrease in the corporate income tax rate : the maximum aggregate corporate income tax rate and municipal business tax will consequently be reduced from 29.63% to 28.59% as of 1 January 2009

- 0% withholding tax on dividends distributed to entities residing in a tax treaty country. The parent foreign company needs to be subject in its country to a tax corresponding to the Luxembourg corporate tax (at least 11% calculated on a taxable similar basis)

-Under the current tax laws profits derived from qualifying IP rights are 80% exempted. As from 1 January 2009 eligible IP rights will be exempted from net worth tax

- Motor vehicle tax not deductible any more in 2009

- Increase in the tax credit for hiring unemployed workers from 10% to 15%

- Income tax legislation adapted to neutralize potential negative tax consequences of adopting IFRS instead of Luxgaap

(B) Indirect taxes (Bill of 9 Seeptember 2008)

- Abolition of the Capital Duty as of 1 January 2009 : the fixed capital duty of 1,250 EUR for UCI, SICAR and SIF and the 0.5% capital duty would be abolished

- The contribution of real properties located in Luxembourg against shares would be subject to a reduced duty of 1.7% (registration duty 1.2 % and 0.5 % transcription duty) instead of the current rate of 7% (6% registration duty and 1% transcription duty)

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