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On 17 January 2023, the Committee on Economic and Monetary Affairs of the EU Parliament adopted a number of recommendations for amendments to the draft directive relating to the prevention of the misuse of shell entities. ATAD III aims to combat misuse of shell entities by introducing minimal substance requirements and improving exchange of information between the EU tax administrations. It is scheduled to enter into force on 1 January 2024, with a look-back period starting on 1 January 2022.

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On 12 October 2022, the 2023 draft budget law no. 8080 (“Draft Law”) was introduced to the Luxembourg Parliament. As the current period is characterized by various political and economic developments, no extensive tax measures have been proposed. The Parliament approved the Draft Law on 15 December 2022, subject to confirmation by the Luxembourg State Council that the second vote is not required.

Further to our tax alert “European Union reaches an agreement on minimum corporate tax”, we would like to share information on the measure concerning Pillar 2. Learn more

Further to our tax alert “Luxembourg’s newly proposed tax measures”, we would like to share information on the measure concerning the decrease of Luxembourg VAT rates for year 2023. Learn more

Grant Thornton Luxembourg would like to point out some important guidelines and features regarding the Country-by-Country Reporting (“CbC Reporting”) laws in Luxembourg as the fiscal-year 2022 (“FY22”) is drawing to a close. This is important as the close of FY22 will bring with it the deadlines for various CbC Reporting obligations for many Luxembourg companies.

The Luxembourg Parliament adopted on 18 October 2022 the bill of law number 6539B (the Law) introducing the administrative dissolution without liquidation procedure (the Administrative Dissolution Procedure). The purpose of the Law is to implement a collaboration between the Public Prosecutor and the Luxembourg Trade and Companies Register (the RCS) in order to dissolve dormant and empty shell companies in a more time- and cost-efficient way by avoiding the formal judicial liquidation procedure.

On 12 October 2022, the 2023 draft budget law no. 8080 (‘‘Draft Budget Law‘‘) was introduced to the Luxembourg Parliament. Due to the current economic situation, no substantial tax reforms have been proposed. On the same day, a drop in VAT rates was proposed by the draft law no. 8083 (“Draft VAT Law”). Moreover, draft law no. 8082 (“Draft RE Law”), introducing changes to the taxation of real estate, was filed with the Luxembourg Parliament on 10 October 2022. Learn more

On 4 May 2022, the Luxembourg tax authorities (“LTA”) published revised guidance (the “Revised Guidance”) relating to the law dated 25 March 2020 (the “DAC 6 Law”) in the form of Frequently Asked Questions. The Revised Guidance contains clarifications relating to certain concepts present in the DAC 6 Law.

The Energy Tax Credit is a measure introduced by the Chamber of Deputies from July to compensate the postponement of the index and thus supporting households to face the soaring prices of energy.

In terms of fiscal measures, the exceptional Covid-19 measures put in place through mutual agreements with the border countries to enable homeworking have ended on 30 June 2022. From a fiscal point of view, the tolerance threshold of days worked abroad for non-resident employees is fixed from July 2022.

On 13 June 2022, a Draft Bill (the “Bill”) implementing the Council Directive (EU) 2021/514 into domestic law was presented to the Luxembourg Parliament. It is the 7th installment of the so-called Directive on Administrative Cooperation in the field of taxation and is most commonly referred to as DAC 7. The Bill sets out numerous obligations to certain digital platform operators stipulating reporting requirements and setting out compliance standards. The proposed measures are to be applicable as from 1 January 2023.

On 7 June 2022, Luxembourg and the United Kingdom (’’the UK’’) signed a protocol in order to amend the existing double tax treaty between these jurisdictions. The new treaty introduces a reduction on the withholding tax rate on dividend payments and royalties, as well as the so-called ‘’land rich clause’’ relating to capital gains arising from the sale of shares holding, directly or indirectly, immovable property.

With this newsletter, Grant Thornton Luxembourg would like to draw your attention to the first amendments to the proposal for a directive relating to the prevention of the misuse of shell entities (the “Anti-Tax Avoidance Directive III” or ‘’ATAD III’’) published on 12 May 2022.

The new index comes into force on 1 April 2022, resulting in a 2.5% increase in wages, salaries and pensions.

Luxembourg Companies have to pay quarterly tax advances for Corporate Income Tax (CIT), Municipal Business Tax (MBT) and Net Wealth Tax (NWT) upon request from the Luxembourg tax authorities (LTA). Learn more