Bill of law 6891 (the “Bill”) was submitted on 13 October 2015 to the Luxembourg Parliament.
1. Introduction of a digressive scale of rates for net wealth tax
Luxembourg corporations are currently subject to a uniform tax rate of 0.5% assessed on the company’s net wealth.
The Bill introduces a reduced rate of 0.05% for a net wealth base exceeding EUR 500 million, without cap.
2. Abolition of the alternative minimum tax and introduction of a minimum wealth tax
The Bill abolishes the alternative minimum tax for corporations and replaces it by a minimum wealth tax as of 2016 (“Minimum Wealth Tax”). Securitisation vehicles and SICARs will also be subject to the Minimum Wealth Tax.
The Minimum Wealth Tax will be at a rate of EUR 3,210 for entities with financial assets, transferable securities and cash at bank exceeding 90% of their total gross assets plus EUR 350,000.
For all other companies subject to net wealth tax, the Minimum Wealth Tax will be determined according to a progressive tax scale in accordance with their balance sheet.
Total Assets
Minimum Wealth Tax (including solidarity surcharge)
<= EUR 350,000
EUR 535
> EUR 350,000 and <= 2,000,000
EUR 1,605
> EUR 2,000,000 and <= EUR 10,000,000
EUR 5,530
> EUR 10,000,000 and <= EUR 15,000,000
EUR 10,700
> EUR 15,000,000 and <= EUR 20,000,000
EUR 16,050
> EUR 20,000,000 and <= EUR 30,000,000
EUR 21,400
> EUR 30,000,000
EUR 32,100
3. Step-up for substantial participation owned by individual immigrating to Luxembourg
The Bill introduces a step-up rule for non-resident individuals immigrating to Luxembourg.
The Bill introduces a step-up rule for (i) substantial shareholdings, which are participations in a company of more than 10% and for (ii) profit-sharing loans issued by a company in which a non-resident owns a substantial shareholding. Under this new rule, a non-resident migrating to Luxembourg may revalue those assets at their fair market value.
The Bill provides, however, that this step-up will not benefit individuals who were Luxembourg tax resident for more than 15 years and non-Luxembourg tax resident for fewer than 5 years before the date of migration to Luxembourg.
The step-rule will apply from the assessment year 2015.
4. Tax adjustment for individuals arriving in or departing from Luxembourg in the course of the year
The Bill introduces an option for taxpayers who are only resident in Luxembourg for part of the year to be taxed as if they were resident in Luxembourg for the full year. Potentially, excessive taxes withheld on salaries or pensions paid in Luxembourg may therefore be reimbursed.
This option will apply as from the assessment year 2016.
