The Luxembourg government has announced a package of tax measures that will be introduced next year including the reduction of the corporate tax and changes to the personal income tax. The government plans a gradual corporate tax rate reduction by three percent. Starting with the two percent cut to 19 percent by January 1, 2017. And since January 2018, the rate will drop to 18 percent.
In addition, a lower rate of 15 percent will be available for the “young, innovative companies “, annual taxable income that does not exceed EUR 25,000 per year.
Nevertheless, the company’s ability to carry losses forward to offset against future income will be limited in 2017. Existing law allows unlimited number of losses of previous years. Starting next year, the accumulated losses can be carried forward only for 10 years and use to compensate for a maximum of 80 percent of profits.
The government also intends to revocation of provisional 0.5% percent crisis tax in 2017 and make income tax system more “fair” by reducing tax rates. However, the tax on high incomes which exceed EUR 150000 would be 41% and revenues more than EUR 200,000 – 42 percent.