Corporate income tax rate reduced to 15%
As part of the government’s continued efforts to enhance Luxembourg’s competitiveness, the corporate income tax rate is proposed to decrease by 1% as from 2027.
For companies established in Luxembourg City, this would bring the combined nominal corporate tax rate down from 23.87% to 22.80% as from the 2027 tax year.
Indefinite carry forward of tax losses
The Budget bill proposes to abolish the current 17-year limit on the carry forward of tax losses that was introduced on losses generated as of financial year 2017.
Extension of the holding period for certain capital gains
It is proposed to increase the minimum holding period from six to twelve months to qualify for the exemption of certain capital gains . This will have an effect both on resident and non-resident taxpayers.
For non-resident investors, this change is particularly relevant where Luxembourg domestic law gives Luxembourg taxing rights over a gain resulting from a substantial participation (>10%) and the applicable double tax treaty does not prevent Luxembourg from exercising those taxing rights.
Other tax measures
- An extension of the investment tax credit for investments in the digital and energy transition, together with an increase of the relevant rate from 18% to 21%; and
- A new tax framework for stock options for innovative businesses. See our newsletter for further details.
These measures complement previously announced initiatives including the expatriate regime, participation bonuses, the overhaul of the carried interest regime and incentives for start-ups.
For any questions in relation to the 2027 Budget bill, please do not hesitate to contact our team below or your trusted adviser at Loyens & Loeff.
