Technical change

Legalization of the current administrative practice in terms of deadline for filing tax returns.

The 2023 budget law has extended the filing deadline for corporate income tax, municipal business tax, net wealth tax and personal income tax returns from 31 March to 31 December.

VAT rates amendments

Effective as from 1 January 2023 VAT Cut by 1% but super-reduced rate remains unchanged.

From 1 January 2023, the ‘normal’, ‘intermediary’ and ‘reduced’ rates will be lowered from 17% to 16%, from 14% to 13% and from 8% to 7%, respectively. The government hopes to increase purchasing power and reduce inflation.

But the ‘super-reduced’ rate of 3% remains untouched and not lowered.

Profit-sharing bonus

Implemented in 2021, the profit-sharing bonus allows employees to benefit from a 50% exemption of their remuneration paid as a prime participative, subject to conditions, and among other that it does not exceed 5% of the positive result of the employer (all notion of group being excluded).

The 2023 Budget Law has added an option for the assessment of the 5% threshold on the aggregate result realized by a group of companies (forming a tax unity in Luxembourg). The option is subject to a joint request to be filed by the company head of the tax unity.

Impatriate regime – Reduction of the remuneration threshold

A reduction of the minimum income threshold required to benefit from the impatriate regime has been enacted. It would be sufficient for a foreign employee to earn a gross income (excluding benefits) of EUR 75,000, instead of the current threshold of EUR 100,000 considered as too restrictive.

In a context of difficulties in recruiting on the international scene, this measure aims at maintaining the attractivity of Luxembourg. With this amendment, more employees may be able to benefit from an exemption, for up to 8 years (subject to conditions), on part of their costs covered by the employer and relating to the move to Luxembourg.