On 11 October 2017, Finance Minister presented the draft 2018 Budget Law to the Luxembourg Parliament. The proposed bill on the budget provides for only a few changes for legal entities. On the proposal of the budget, starting January 1, 2018, the CIT rate will decrease from the current 19% to 18%. In addition, for small companies whose annual taxable income is less than 25,000 euros, the reduced CIT rate will be applied at 15%. For companies with net taxable basis of between EUR 25,000 and EUR 30,001, the CIT rate will be EUR 3750 plus 39% on the taxable basis beyond EUR 25,000 for 2017, and EUR 3750 plus 33% on the taxable basis beyond EUR 25,000 for 2018.

According to the budget proposal, from 2018, corporate property owners will have to pay a tax credit for their “global” software investments (i.e. 8% for the first installment up to 150,000 euros and 2% for the investment of over 150,000 euros). However, this tax credit does not exceed 10% of the income tax payable on the tax year of the acquisition. Self-created software and software obtained from a related company is excluded.

The investment tax credit for companies would be applicable on the purchase of new electric cars with zero emission or hydrogen fuel cell cars with effect from taxable year 2018 for all qualifying cars registered after 31 December 2017. The acquisition price (after deduction of possible subsidies) could be taken into account for the credit up to the amount of EUR 50,000 per eligible vehicle.

The investment tax credit would apply to the purchase of new electric cars with zero-emission or hydrogen-fueled cell cars starting from the taxable year of 2018 for all eligible cars registered after 31 December 2017. The purchase price (after deducting potential subsidies) could take into account a loan of up to EUR 50,000 for each eligible vehicle.