Luxembourg Abolishes Crisis Contribution In 2012

by Ulrika Lomas, Tax-News.com, Brussels

02 January 2012

The Luxembourg government has recently published an overview of the key changes for individuals in the Grand Duchy in 2012, following entry into force of a series of new laws, and including notably the abolition – a year earlier than initially planned – of the controversial crisis contribution.

In its release, the government explains that although it had initially planned to impose the crisis contribution in both 2011 and 2012, it had been able to annul the levy within the framework of the signing of an agreement on civil service reforms.

In addition to removing the 0.8% levy, the government confirms in its statement that the CAR-e bonus, designed to promote the purchase of low carbon emission vehicles, will be extended until December 31, 2012, as agreed by the governing council on December 2.

Consequently, individuals electing to purchase a new vehicle in 2012 will benefit from a bonus of EUR750 (USD970) for vehicles emitting less than 100g per km and EUR1,500 for vehicles emitting below 90g per km. The bonus allocated for the purchase of a vehicle that is 100% electric or of a vehicle whose carbon dioxide emissions do not exceed 60g of carbon dioxide per km will increase from EUR3,000 to EUR5,000 in 2012, the government notes.

A new incentive of EUR1,000 for the purchase of electric quadricycles, whose empty mass does not exceed 400 kilos and whose net maximum power does not exceed 15 kW will also be introduced, the government adds.

Luxembourg’s Finance Minister Luc Frieden defended the country’s 2012 draft budget and plans for next year at the beginning of December, insisting that the fiscal provisions contained in the bill form part of a longer-term plan to stimulate growth and to increase purchasing power.

According to the minister, on the revenue side, the 2012 budget reflects the government’s commitment to an “attractive fiscal policy”, and contains plans, in addition to the abolition of the crisis contribution, to maintain unchanged corporation tax and individual income tax in Luxembourg.

At the time, the minister reaffirmed the government’s aim to achieve a balanced budget in 2014, and to realize a surplus in 2015-2016, reflecting the “medium-term objective”.

Luxembourg’s 2012 budget provides for a deficit of 0.7% next year.

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