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Luxembourg Eyes New Tax Measures In 2013

by Ulrika Lomas, Tax-News.com, Brussels

09 November 2012


Luxembourg’s Finance Minister Luc Frieden has unveiled details of government amendments to the country’s 2013 state budget bill, which include a raft of supplementary fiscal measures aimed at further consolidating the budget for next year.

Following the submission of the 2013 budget bill to the country’s chamber of deputies in October, Luxembourg’s government, parliamentary groups and political parties held talks on new fiscal consolidation measures. The supplementary initiatives adopted by the government, intended to reduce the budget deficit by a further EUR270m (USD343.6m) next year compared with the original budget draft, have now been presented to lawmakers. Both supplementary revenue- and expenditure-based measures are therefore provided for within the framework of a separate bill.

According to Frieden, the additional consolidation measures will enable the government to save in an “intelligent manner” and will serve to support the economy and to preserve social cohesion.

The bill provides for additional fiscal revenues totalling around EUR414m. Among the key measures are plans to impose a minimum tax on companies of between EUR500 and EUR20,000. The government originally planned within the framework of the initial budget, to expand the scope of the minimum tax on companies to include all firms at levels between EUR500 and EUR10,000, depending on revenues and the level of a company's balance sheet.

The separate legislation provides for a new 40% tax rate to apply to income in excess of EUR100,000 for class 1 contributions and for income above EUR200,000 for class 2 contributions. Tax ‘classes’ in Luxembourg apply in respect of familial and residential status. The text also adapts and toughens the taxation of stock options.

Other key provisions contained in the bill include plans to increase the unemployment fund surcharge on individuals earning no more than EUR150,000 per year and joint filers earning no more than EUR300,000 per year from 4% to 7%. The unemployment fund surcharge for individuals and couples with annual income in excess of these thresholds will increase from 6% to 9%.

The excise duty levied on tobacco and diesel will also increase, to bring in an additional EUR35m in revenue.

With the exception of the rise in the tax on tobacco and diesel, which is already in force, the measures provided for in the new bill are due to enter into force in Luxembourg from January 1, 2013.

The amendments to the draft budget were adopted by Luxembourg’s governing council on November 5 and were submitted to the chamber of deputies on November 6. The text is to be examined by the state council shortly.

TAGS: tax | law | budget | corporation tax | Luxembourg | excise duty | legislation | tax rates | individual income tax

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