Exit tax provisions for corporate entities has been amended by the Luxembourg Parliament on May 13, 2014 and approved by the law bill 6556. The law will not be compliant with European Union (EU) law. The amendment gives rise an option for a taxpayer to defer tax due on the transfer of statutory seat and place of central administration (hereafter referred to as migration) by a Luxembourg company to another member state of the European Economic Area (EEA).
The new law provides the opportunity for the migrating company to go for deferral of the payment of the tax incurred due to its migration. The company will get the opportunity to defer payment of tax liability so long as it is the owner of the asset and liabilities transferred and remain the resident of the member state of the EEA. It will not be imposed any interest charge on deferred tax liabilities. The new law will enhance equal treatment at the time of transfer of an enterprise or of a permanent establishment both for resident and nonresident individuals within the EEA.
