By Paloma Schwarz Martínez
Luxembourg will lower its corporate tax rate from 21 percent to 18 percent within the next 2 years to encourage investment, the government has announced.
Finance Minister Pierre Gramegna said in a March 1 statement that the corporate rate will be reduced to 19 percent in 2017 and 18 percent in 2018.
No change will be made to the the municipal business tax rate. For the city of Luxembourg, the rate will remain at 6.75 percent.
The government does plan a reduction of the solidarity surtax, though. The tax rate, currently set at 1.47 percent, will drop in 2017 to 1.33 percent and will drop further in 2017 to 1.26 percent. As a result, the total tax burden in 2018 will be 26.01 percent, as compared to the 2016 rate of 29.22 percent.
Small and start-up companies will pay a reduced corporate tax rate of 15 percent beginning 2017, the government said. To qualify, the company’s annual taxable income must be € 25,000 (USD 27,166) or less. These companies will also bear a reduced solidarity surtax of € 1,050 (USD 1,141) beginning in 2017.
The minimum net wealth tax on holding and finance companies will be increased from € 3,210 (USD 3,489) to € 4,815 (USD 5,233), the Finance Minister said.
The government also said it would impose limitations on carryforward of losses beginning in 2017.
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