Luxembourg has published a Grand-Ducal Regulation in the Official Gazette on 23 December 2024, outlining the application of tax credits under the Law of 22 December 2023. This law ensures minimum effective taxation for multinational and large domestic groups and applies to tax years starting after 31 December 2023.
The Regulation clarifies that only transferable and negotiable tax credits qualify as income when calculating the profit or loss of a company. Non-refundable, non-transferable credits are excluded from these calculations. It also specifies how refundable tax credits should be reported, with rules on when and how they should be recognised in income.
For transferred tax credits, the Regulation details the treatment of sale prices. If the credit is sold within 15 months of issuance, the full sale price is included as income for the original tax year. If sold later, the difference between the original value and the sale price is recorded as a loss.
The regulation also covers the treatment of tax credits tied to asset acquisitions, including how losses are accounted for over the asset’s useful life and the reporting of unused credits.
Earlier, Luxembourg has enacted the bill amending the law that implements the Minimum Taxation Directive (2022/2523). The Luxembourg Government Council approved a draft law on 5 June 2024.
