Luxembourg's new tax measures boost competitiveness

Jean-Christophe Grogna

Tax Compliance Senior Manager, Luxembourg

Stephen McKenna

Chief Commercial Officer

Published: 22nd Jan 2025

In our latest thought leadership, Altum Group’s Jean Christophe Grogna, Senior Manager – Tax, explains a series of new tax measures designed to make business operations more attractive and competitive in Luxembourg.

Effective from January 1, 2025, these measures include a reduction in the corporate income tax rate, simplification of the minimum net wealth tax calculation, and several other significant changes. These initiatives aim to enhance the business environment and provide substantial benefits to both large corporations and small entities alike.

The percentage of financial assets is not to be considered anymore in the calculation of the minimum net wealth tax. The Minimum Net wealth tax is as from 1st January 2025 to be determine as follow:
- EUR 535 if the total balance sheet is less than or equal to EUR 350,000
- EUR 1,605 if the total balance sheet is higher than EUR 350,000 and less than or equal to EUR 2 million
- EUR 4,815 if the total balance sheet is higher than EUR 2 million
The maximum net wealth tax amount due by a taxpayer will be EUR 4,815 instead of EUR 32,100 in the past which represents a significant positive change for the taxpayer.
There has been an introduction of a “Single-entity group” which define a taxpayer that is not part of a consolidated group for financial purposes and not considered as a stand-alone entity.

Upon some conditions it is permitted to the Single entity group to fully deduct its exceeding borrowing costs of the tax year. This measure is applicable as from the 2024 accounting year and will be favourably received by the capital market sector.

Optional Waiver for the participation exemption regime

Taxpayers can now opt for a waiver for tax emption on dividend and capital gains. This option is aligned with the regime applicable in other member states and ease the utilisation of tax losses by the taxpayer.

Clarification of the tax treatment of share buyback.

Upon certain conditions which are now clarified in the Luxembourg Tax Law, the cancellation of an entire class of shares is not subject to Luxembourg Withholding tax.

Let’s connect

Facing complexities with any of the recent changes? Don’t navigate this alone, our expert team is here to guide you through the intricacies, ensuring compliance and minimising risks. Reach out to Stephen McKenna and Jean-Christophe Grogna and let us help you stay ahead in the evolving landscape of tax regulations.