Tax Changes For 2018 Disclosed In The New Budget Bill

On 11 October 2017, and for the last time before next year's parliamentary elections, the Luxembourg Finance Minister presented the budget bill for 2018 ("Bill") N° 7200 to Parliament (Chambre des Députés).

The main tax-related provisions of the Bill are laid out below in detail and include inter alia:

changes to the tax treatment of capital gains in the case of business restructurings; improvements to the investment tax credit system; extension of the VAT exemption to the management of collective internal funds held by a life-insurance undertaking; introduction of 3 assessment options for resident spouses/partners; extension of the inheritance tax exemption for spouses/partners without common descendants; and amendment of the law on the exchange of information upon request in tax matters further to the decision of the Court of Justice of the European Union ("CJEU") in the Berlioz case (C-682/15). In addition the Finance Minister reiteratered that the Luxembourg government is working with the international community for a fair and appropriate taxation of internet-based innovative business models. In this respect Luxembourg pushes for an harmonised approach and a global level playing field.

In the same context, the Luxembourg government expressed again its opposition against the current EU proposal for a financial transaction tax.

The Bill does not include the expected substantial modification of the investment tax credit system, in particular as regards start-ups, research and investment intensive enterprises. Even though the Bill includes some improvements for investments in software...

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