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Luxembourg Summarizes Key Tax Changes In 2013

by Ulrika Lomas, Tax-News.com, Brussels

09 January 2013


The Luxembourg government has recently presented an overview of the key tax changes in the Grand Duchy from January 1, 2013.

The changes include the introduction of a new 40% tax rate to apply to income in excess of EUR100,000 (USD130,740) for class 1 contributions and to income above EUR200,000 for class 2 contributions. Tax "classes" in Luxembourg apply in respect of familial and residential status.

From January 1, 2013, the country’s solidarity tax is to rise by 2%, from 7% to 9% for households and from 5% to 7% for corporations.

Tax deduction documents or "tax cards" held by all employees and pensioners resident in the Grand Duchy of Luxembourg will be prepared and issued by the country’s direct tax administration and not by communal administrations from January 1, 2013.

Provisions pertaining to financial aid aimed at promoting low emissions vehicles in Luxembourg ("prime CAR-e") are to be modified from January 1, 2013. The EUR750 rebate, accorded for the purchase of cars with emissions not exceeding 100g of carbon dioxide per kilometer, and the EUR1,500 rebate benefiting cars with emissions not exceeding 90g of carbon dioxide per kilometre, will not be extended beyond December 31, 2012. Consequently, cars put into circulation for the first time after December 31, 2012, will no longer benefit from either CAR-e rebate.

However, the EUR5,000 rebate accorded for the purchase of electric vehicles as well as for the purchase of vehicles emitting less than 60g of carbon dioxide per kilometre, such as hybrid "plug-in" cars, is to be extended and will apply in 2013.

Designed to reduce the budget deficit, Luxembourg’s 2013 state budget provides for a number of key tax changes, including plans to modify the tax regime governing stock options, to reduce the tax credit rates for investment, to modify the taxation of wealth, and to reduce the tax deduction for debit interest.

Other measures provided for within the framework of the 2013 budget include plans to increase the excise duty levied on tobacco and fuel and to reduce the maximum reimbursable amount for value-added tax on housing from EUR60,000 to EUR50,000.

The government aims to provide further details on the various fiscal and budgetary measures shortly.

TAGS: environment | tax | vehicle tax | employees | corporation tax | Luxembourg | excise duty | tax rates | tax breaks | individual income tax

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